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Oil prices rise on analyst predictions that oil stocks fell last week

Oil prices rise on analyst predictions that oil stocks fell last week

Oil futures drifted higher in light holiday trading Monday after predictions of a drop in crude inventories raised new supply concerns.
With little other news to motivate buying or selling, investors focused on forecasts by analysts including Addison Armstrong, director of exchange traded markets at TFS Energy Futures LLC, who predicted crude inventories fell by 1.5 million barrels last week. Tim Evans, an analyst at Citigroup Inc., predicted that crude stocks fell by 2 million to 3 million barrels.
The Energy Department's Energy Information Administration reports oil inventories on Thursday this week, a day late due to Christmas.
Light, sweet crude for February delivery rose 82 cents to settle at $94.13 a barrel on the New York Mercantile Exchange after falling as low as $92.50 earlier. Prices rose more than $2 on Friday after the government reported consumer spending jumped more than expected in November, raising hopes that the economy will weather the crisis roiling credit markets and that demand for oil and gasoline will strengthen.
Rising stocks also sent oil prices higher Monday; energy investors often view the stock market as a barometer of economic sentiment. But analysts cautioned against reading too much into price moves on light trading days around the holidays, noting that prices can be distorted when volume is low. The Nymex was closing an hour earlier, at 1:30 EST, and markets in the U.S. and many other countries will be closed Tuesday for Christmas.
Many analysts expect oil futures to trade in a narrow range for the duration of the holidays.
"We're going to bounce around between $90 and $95 a barrel," Armstrong said.
Crude futures have since retreated as OPEC boosted supplies and several forecasters cut demand predictions. But in recent weeks, prices have held generally to a range between $87 and $95, leading some analysts to conclude some investors may be poised to make another push for $100 a barrel in the new year.
But there is little consensus on that theory. Other analysts maintain that oil's fall rally was driven more by speculative buying than the underlying fundamentals of supply and demand. Analysts in this school of thought believe oil's true value is closer to $50 or $60 a barrel.
"Although we cannot predict the highs and lows of oil prices, we are more certain that volatility will continue and the current bubble will eventually burst," said Fadel Gheit, an analyst with Oppenheimer & Co., in a recent research note.
Other energy futures were mixed Monday. January heating oil futures fell 1.44 cents to settle at $2.5947 a gallon on the Nymex, while January gasoline futures rose 0.45 cent to settle at $2.384 a gallon.
January natural gas futures dropped 16.5 cents to settle at $7.025 per 1,000 cubic feet.
In London, February Brent crude rose 24 cents to settle at $92.70 a barrel on the ICE Futures exchange.


Updated : 2021-03-01 16:28 GMT+08:00