Low temperatures hold oil prices above US$41

14-Feb-05

Oil prices continue above US$41 a barrel as temperatures in USA started falling more - in line with seasonal norms, spurring heating oil buying. US light crude stood at US$41.27 a barrel. London Brent rose to US$38.37. Two factors have helped oil inventories build - high Opec production and a spell of unseasonably mild weather, sustaining the sharp market correction of the past two months. Mild temperatures have helped stave off demand for heating fuels and allowed commercial stocks to build. Despite Opec's decision to cut one million bpd of excess output, the cuts implemented may not be sufficient to restore market balance. Saudi Arabia, earmarked to cut 500,000 bpd, reduced January allocations to some customers significantly, but Kuwait plans to will supply full contract volumes in January.