30 January 2004, 11:35  Oil steadies after slide but further losses seen

SINGAPORE, Jan 30 - Oil prices steadied on Friday after a week-long sell off but dealers predicted speculators would continue to cash in on a winter rally that took prices to 10-month highs. U.S. light crude for March rose 19 cents to $33.00 a barrel in Asia, above Thursday's four-week low of $32.41 but well off $36.37 traded last week, the highest oil price since before the U.S.-led invasion of Iraq last March. The March price fell 2.4 percent on Thursday, marking the fourth consecutive daily fall in the market. Benchmark Brent crude, which fell 2.2 percent on Thursday, rose 16 cents to $29.29 a barrel. "Today's retracement is very small compared with the big drop yesterday," a Tokyo-based broker at a Japanese trading house said.
"The market has had several big drops this week. That tells us bearish sentiment will continue to prevail next week." Oil dealers said support from winter heating demand in the United States, the world's biggest energy market with consumption of more than 20 million barrels per day, was fading. U.S. crude stocks have fallen to 28-year lows but the U.S. government's energy arm, Energy Information Administration, said heating oil supplies were ample for the rest of winter, despite a wave of colder-than-normal weather. "Speculators will continue liquidating net longs," said Tony Nunan, a manager at the international petroleum business of Mitsubishi Corp. "U.S. heating oil stocks are sufficient." Dealers also said a less hawkish stance by OPEC on prices in recent weeks had undermined prices. Late last year some members of the Organisation of the Petroleum Exporting Countries, including the biggest producer Saudi Arabia, said high oil prices were justified because of the weakness of the dollar, the currency used for international oil trade. In recent days, some OPEC ministers have said the group would likely decide to keep official production limits unchanged when it meets in Algiers on February 10, calming fears the cartel might try to cut output to prepare for lower world demand in the second quarter.
Algerian oil minister Chakib Khelil echoed the calls in an interview with on Thursday. "The most comfortable position may be to let's wait and see what happens in the second quarter and we still have our meeting on March 31 to see if we should be doing something there," he said. OPEC has an official production ceiling of 24.5 million barrels per day, excluding Iraq.//www.reuters.com

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