In The News

Oil lingers above $91 a barrel in Europe

Oil futures hovered above $91 a barrel Tuesday, largely shrugging off higher OPEC and IEA demand forecasts as trading in the February contract dwindled ahead of its expiration.

By early afternoon in Europe, benchmark crude for February delivery was down 35 cents to $91.19 a barrel in electronic trading on the New York Mercantile Exchange.

Floor trading was closed in New York on Monday due to the Martin Luther King holiday. The contract, which last settled in New York on Friday at $90.54, expires in a day and trading is already shifting to the March contract.

While some market experts had predicted that financial investors could drive oil prices beyond $100 a barrel, it seemed that the current rally would fall short of that milepost.

"The market clearly lacks the drive to run at the $100 mark at the moment," said analysts at Commerzbank in Frankfurt. "Given the substantial overhang of speculative long positions, we could see profit-taking, which could result in a further decline in the price of crude oil."

Oil prices got a little support from the monthly report from the Organization of Petroleum Exporting Countries which raised slightly the forecast for demand for its crude.

The demand for OPEC crude is expected to average 29.4 million barrels a day in 2011, an increase of 0.4 million barrels a day over 2010 and an increase of 0.2 million barrels a day over the previous assessment, the Vienna-based group said.

The International Energy Agency also raised its oil demand forecast for 2011, based on recharged global economic growth and a cold winter in the Northern Hemisphere which is leading to more consumption of heating oil.

The Paris-based agency predicts oil demand this year will rise to 89.1 million barrels a day, up from 87.7 million barrels a day in 2010. Last month the IEA forecast 2011 oil demand would hit 88.8 million barrels a day.

A weaker dollar also helped sustain prices by making crude cheaper for investors holding other currencies, while the restoration of oil flow in a trans-Alaska pipeline on Monday was a bearish factor for the market.

The Alaskan pipeline delivering about 630,000 barrels a day — or some 13 percent of the U.S. domestic oil output — was first shut down Jan. 8 because of a leak in an underground pipe.

In other Nymex trading in February contracts, heating oil fell 0.67 cent to $2.6385 a gallon while gasoline lost 0.03 cent to $2.4943 a gallon. Natural gas futures rose 4.8 cents to $4.528 per 1,000 cubic feet.

In London, Brent crude was up 11 cents to $97.54 a barrel on the ICE Futures exchange.

Dorothy Cox of The Trucker staff may be contacted to comment at [email protected] .

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