Oil prices were nearly unchanged on Tuesday, hovering around $49 a barrel as the market weighed weak US economic data against rising geopolitical tensions and Opec production cuts that threaten to tighten supplies. US crude for February delivery was up 12 cents at $48.93 a barrel by 1:48 pm EST (1848 GMT) after hitting a high of $50.47 earlier.
London Brent was up $1.43 at $51.05 a barrel. "Resistance at the $50 area is going to be like $40 was before it. The economic data was not helpful (for crude prices), but the weak economic situation should be priced in and not something new," said Nauman Barakat, senior vice president at Macquarie Futures USA.
Data released Tuesday showed that pending sales of US homes dropped in November to their lowest level in at least seven years and that the country's services sector shrank for the third consecutive month in December. Crude prices were supported by news that Kuwait plans to cut oil supplies to US and European buyers by 10 percent later this month, bringing the producer in line with Opec targets. Kuwait also will cut supplies to Asian customers.
The Organisation of the Petroleum Exporting Countries has cut output three times since September in a bid to halt the price decline. Israel's incursion into Gaza also was seen as supportive. While the conflict does not directly threaten any oil supplies, unrest in the Middle East can bolster prices because countries in the region pump about a third of the world's oil.
Russian gas supplies via Ukraine to the Balkans, Turkey and south-eastern Europe were halted on Tuesday and flows to EU-member state Austria dropped by 90 percent in a deepening price row between Moscow and Kiev. The gas row, which echoes a similar dispute three years ago that also disrupted supplies, will renew questions in Europe about Russia's reliability as a gas supplier. Russia is also a major oil exporter.
Oil has tumbled from a record high of $147.27 reached in July as the global downturn eroded demand. Fuel inventories are rising as demand slows. A report from the US Energy Information Administration due on Wednesday is forecast to show that supplies of crude, distillates and gasoline increased last week.
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