SINGAPORE, Jan 28 - Oil prices slipped further from 10-month highs on Wednesday, undermined by weak markets for gasoline and heating fuel, but forecasts that data due later in the day would show shrinking U.S. oil supplies gave some support. U.S. light crude fell 30 cents to $33.82 a barrel, extending Tuesday's 35-cent decline and taking accumulated losses to 6.9 percent since the market hit $36.37 last week, the highest level since just before the war last March in oil producer Iraq. The latest slide in prices was led by a sell-off in gasoline and heating oil futures. The February gasoline contract sank 0.84 cent to 98.00 cents per gallon, adding to a 1.4 percent fall on Tuesday. February heating oil fell 0.44 cent to 98.80 cents per gallon, extending a small drop a day ago. But oil dealers said they were reluctant to let prices fall too far ahead of a U.S. government report, to be released by the Energy Information Administration on Wednesday, which will provide the latest snapshot of the world's biggest energy market. "I don't think we will get an aggressive push before the stats in case there is a bullish number," a New York broker, who declined to be identified, said.
U.S. crude stocks are already close to 28-year lows, but the data compiled by the EIA is expected to show a further erosion in supplies after cold weather cranked up heating oil demand. Analysts surveyed by estimated the EIA figures would show U.S. crude stocks in the week to January 23 were almost two million barrels below the end of the previous week. They also estimated distillate stocks, which include heating oil, would drop by 3.5 million barrels. High oil prices have sparked calls from consumers for oil cartel OPEC, which controls half the world's crude exports, to loosen the taps. The grouping is due to meet in Algiers on February 10 to consider its production policy, caught between the calls for more oil and expectations for a seasonal downturn in oil demand in the second quarter. Analysts said oil prices are unlikely to fall significantly this year because oil stocks are so low. U.S. demand is likely to stay strong because of the need to build gasoline stocks for summer driving.
In addition, OPEC member Iraq is still producing below pre-war output of 2.2 million barrels per day and is not expected to open its northern crude export route for several months. But the oil minister of OPEC kingpin Saudi Arabia offered some soothing words last week by saying the kingdom would aim for an oil price of $25 a barrel based on OPEC's reference price, currently above $30. Last year, Ali al-Naimi had said high oil prices were justified to offset the impact on OPEC members of a weak U.S. dollar, the currency used in oil trading.//www.reuyers.com