Oil held firm above $97 a barrel on Thursday, after a big build in stocks at a key US storage hub knocked prices off a record high near $100. US light crude for January delivery gained 25 cents to $97.54 a barrel. Oil ended 74 cents lower a day ago after the stockbuild coupled with growing pessimism over the US economy cut down rally to a peak of $99.29.
Nymex floor trading will be closed on Thursday for Thanksgiving holiday, although Globex electronic trade continues as normal. London Brent crude rose 34 cents to $95.18 a barrel. Crude stocks at the delivery point for US crude futures in Cushing, Oklahoma rose 1.2 million barrels to 14.6 million barrels last week, overshadowing an overall drawdown in US crude stocks.
"The inventory increase at this key physical delivery point of the Nymex crude oil contract obviously caught the market somewhat flat-footed, leading to the price pullback," First Energy Capital said in its daily market statement.
The US government showed a larger-than-expected 2.4 million-barrel drop in distillate stocks, which include heating oil and diesel fuel, ahead of chilly winter in the US northeast.
The sharp retreat from the intra-day peak came amid more bearish economic news from the United States, where consumer sentiment fell in November to the lowest in two years, underscoring fears of weaker oil demand. The day, Venezuelan President Hugo Chavez said $100 per barrel is a fair price for oil, as global crude prices approach triple digits.
Venezuela has consistently called for higher oil prices and tends to be more aggressive in seeking production cuts in the Organisation of the Petroleum Exporting Countries than other members of the producer group.
Former Saudi Oil minister Ahmed Zaki Yamani said that oil could tumble as low as $75 a barrel if Opec decided to raise output at its December 5 policy meeting and if the winter season is mild. Opec insists that the rise in oil prices be not caused by insufficient supply in the market, but due to other factors such as speculative trading and political tensions.
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