Oil prices rose this morning in Asian trading amid lingering uncertainty about OPEC's production plans.
Prices ranged high and low yesterday as brokers weighed a healthy supply-demand balance against the possibility of a production cut by the Organisation of Petroleum Exporting Countries.
By midmorning Wednesday, light, sweet crude for November delivery had rebounded 24 cents to $61.25 in Asian electronic trading on the New York Mercantile Exchange. Yesterday, it settled at $61.01, down 44 cents, after rising as high as $62.
Traders were also acting on expectations that weekly government data to be released later Wednesday will show US supplies of crude oil fell last week.
According to a poll of analysts compiled by Dow Jones Newswires, crude oil supplies were projected to decline by 1.92 million barrels last week. Distillate stockpiles, which include heating oil and jet fuel, were expected to gain 2 million barrels, the poll showed.
OPEC recently reduced its demand forecast for the remainder of the year because of weaker demand in the US. However, some cartel members have insinuated that oil prices below $60 could prompt a production cut, and Eurasia Group energy analyst Greg Priddy said in a research note yesterday that Saudi Arabia and Kuwait might even make unofficial cuts to their production.
The seasonal softening of demand comes as US inventories of gasoline stood last week at 207.6 million barrels, 6 percent more than last year and slightly above the five-year average for this time of year.
Oil prices are down more than 20 percent since hitting an intraday record of $78.40 on July 14. That decline is partly because the Gulf of Mexico oil facilities haven't been hit by hurricanes, as they were last year.
Also, the diplomatic standoff between Iran and the United Nations has been marked recently by a more conciliatory tone from both sides. The summer spike in prices was fueled largely by concerns that Iran, which defied the UN's Aug. 31 deadline to stop enriching uranium, might disrupt oil supplies if sanctions were imposed or if the monthlong conflict between Lebanon and Israel escalated.
In other Nymex trading, heating oil futures rose less than a penny to $1.6645 a gallon while gasoline prices were up 0.82 cent to $1.5000 a gallon. Natural gas futures fell 16.1 cents to $4.365 per 1,000 cubic feet. The contract had settled Monday at $4.475 per 1,000 cubic feet - the lowest close since Sept. 26, 2003.