Oil turns higher in Asia

December 10, 2008

, SINGAPORE, December 10 – World oil prices turned higher in Asia on Wednesday after earlier losses, while investors awaited a weekly US report for more clues about demand in the world\’s biggest energy user, dealers said.

In afternoon trade, New York\’s main futures contract, light sweet crude for January delivery, rose 1.03 dollars to 43.10 dollars a barrel. The contract closed at 42.07 in the United States on Tuesday after shedding 1.64 dollars.

Brent North Sea crude for January delivery gained 82 cents to 42.35 dollars, after closing down 1.89 dollars at 41.53 on Tuesday in London.

Oil prices have gyrated this week. There was initial market optimism over US president-elect Barack Obama\’s plans for massive infrastructure investment to help revive the recession-hit economy.

But some analysts expected the gains to be short-lived, with soft energy demand in the immediate term while industrialised economies are in recession.

"The type of volatility we are seeing is what we are going to see for the short term future," said Justin Wilks, a trading manager with Global Commodities, an Australian investment management company.

The US Department of Energy was due later Wednesday to release its weekly energy reserves report. Analysts polled by energy information provider Platts expected crude stocks to have risen by 2.7 million barrels in the past week.

Gasoline stocks were tipped to rise 1.4 million barrels while distillates, including heating oil, were expected to fall 1.6 million barrels, the Platts survey of analysts showed.

Looking ahead, the market will be closely watching next week\’s OPEC meeting in Algeria, where the oil cartel is widely expected to announce another round of production cuts to shore up prices.

On Tuesday, OPEC member Libya called for a reduction in output at the December 17 meeting.

"The market needs some substantial action," said Shukri Ghanem, the head of the Libyan national oil company who is his country\’s representative at OPEC.

Referring to current prices, he said: "I think they are close to a bottom and after the OPEC meeting, they will rebound."

Investors\’ worries over the impact on energy demand of a slowing global economy have pulled oil prices down by about 70 percent from record highs above 147 dollars in July.

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