Oil rises above $79 a barrel in Asia

Posted by Philip Dru on 12/30/09 • Categorized as Economy, Oil

KUALA LUMPUR, Malaysia (AP) – Oil prices rose above $79 a barrel Wednesday in Asia despite a surprise rise in weekly U.S. crude inventories ahead of the release of government data.

Benchmark crude for February delivery was up 19 cents to $79.06 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract added 10 cents to settle at $78.87 on Tuesday.

Oil has gained for six straight days but briefly traded lower early Wednesday after the American Petroleum Institute reported an increase of 1.725 million barrels in U.S. inventories last week, said Clarence Chu, a trader with Hudson Capital Energy in Singapore.

The rise contradicted market expectations of a drop of 2 million barrels and all eyes are now on the Energy Information Administration weekly data due to be released later Wednesday, he said. The more comprehensive EIA data last week showed crude stocks were down 4.9 million barrels.

“Oil prices are still holding. If the EIA numbers again show a reduction in stockpiles, prices will move up but there will be strong resistance at $80 a barrel,” Chu said. On the other hand, oil prices will slide if the EIA data show a build up in inventories, he said.

Futures contracts for oil, natural gas and heating oil have all become more expensive this month as snow storms blanketed parts of the U.S. and a sharp drop in supplies of crude and other fuels surprised traders.

New figures showed U.S. retail gas prices increased for the fourth straight day, the first time it’s done that since October, and a report Tuesday by MasterCard SpendingPulse said Americans bought more gas last week than they did a year ago, marking the fifth straight week that demand strengthened.

Despite the year-end rally, analysts have said that oil prices may fall next month as current levels were unsustainable.

In other Nymex trading in January contracts, heating oil rose 0.5 cent to $2.1075 gallon while gasoline added 1.2 cent to $2.0225 a gallon.

In London, Brent crude for February delivery rose 33 cents to $77.97 a barrel on the ICE Futures exchange.

AP | EILEEN NG | Wed, Dec 30, 2009

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