US crude futures edged higher just below $80 a barrel today, trading in the middle of recent ranges and taking cues from the dollar and weather in the United States.
The greenback edged lower versus the euro and held steady against a basket of currencies, while unseasonably warm weather in the northeastern United States implying soft demand for heating oil kept a lid on prices.
"The dollar is flat and there is nothing else that really stands out as a major influence. Temperatures are unseasonably mild in the United States and crude is holding the range between the high $70s and low $80s," said Peter McGuire, managing director of CWA Global Markets.
"Opec said they wanted $80 and they are getting it. I can't see a surge in demand unless things turn much colder in the United States."
The Organization of the Petroleum Exporting Countries should hold oil output steady when it meets in December as current prices do not suggest the need to change supply, the head of Libya's National Oil Corporation said yesterday.
NYMEX crude for December delivery rose 24 cents to $79.82 a barrel by 0641 GMT, after settling up 44 cents on Wednesday, when a drop in U.S. oil and fuel inventories was overshadowed by wider economic concerns.
Brent crude gained 30 cents to trade at $79.77.
Implied oil volatilities are at their lowest since February 2008, back near levels before last year's surge to a record high.
"In the last five or six months the market has found a range and that range is closing in on itself," said Jonathan Kornafel, director, Asia at Hudson Capital.
He noted trading bands had narrowed from $10 between $65 and $75 to a $4-range between $76 to $80, capped by technical resistance at $80 and $82 as well as worries about fundamental demand, while ultra-accomodating monetary policy would encourage investors to buy on dips.
Commercial crude oil stocks in the United States fell 900,000 barrels last week, the Energy Information Administration (EIA) said yesterday, more than analyst projections for a 300,000 barrel draw.
But the fall was much smaller than the 4.4 million-barrel drop reported earlier this week by the industry group American Petroleum Institute.
Also in the EIA report, gasoline stocks were down 1.7 million barrels against a forecast for no change, while distillate stocks also fell, by 300,000 barrels versus expectations for a 700,000-barrel drop.
Reuters