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Oil back below $79 a barrel as stocks seen rising

Oil back below $79 a barrel as stocks seen rising

Oil prices were back below $79 a barrel Wednesday after a report showed an unexpected rise in weekly U.S. crude inventories and the dollar made gains on other major currencies.
Prices were supported by cold weather in the United States, which increased demand for natural gas and heating oil.
By early afternoon in Europe, benchmark crude for February delivery was down 30 cents to $78.57 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, prices peaked at $79.19. On Tuesday, the contract added 10 cents to settle at $78.87.
Oil has gained for six straight days but was lower Wednesday after the American Petroleum Institute reported an increase of 1.725 million barrels in U.S. crude inventories last week.
The rise contradicted market expectations of a drop of 2 million barrels. All eyes are now on the Energy Information Administration weekly data due to be released later Wednesday. The more comprehensive EIA data _ the market benchmark _ last week showed crude stocks down by 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," said Clarence Chu, a trader with Hudson Capital Energy in Singapore. On the other hand, oil prices will slide if the EIA data show a buildup in inventories, he added.
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, arguing current levels are unsustainable.
A stronger dollar also pushed prices down, as oil priced in dollars becomes more expensive for investors holding other currencies.
The euro was down to $1.4337 from $1.4351 late Tuesday in New York, while the British pound fell to $1.5862 from $1.5903 and the dollar nudged up to 92.29 Japanese yen, from 91.96 yen.
In other Nymex trading in January contracts, heating oil rose 0.69 cent to $2.1097 gallon while gasoline also added 0.69 cent to $2.0175 a gallon. February natural gas was down 0.04 cent to $5.836 per 1,000 cubic feet.
In London, Brent crude for February delivery fell 5 cents to $77.59 a barrel on the ICE Futures exchange.
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Associated Press writer Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.


Updated : 2021-06-23 00:55 GMT+08:00