January 29, 2008

Oil prices hold near 91 dollars

LONDON (AFP) - World oil prices fell in New York and rose in London Tuesday as traders eyed volatile global stock markets and awaited US energy stockpiles data, a US interest rate call and an OPEC production meeting later in the week.

New York's main contract, light sweet crude for delivery in March, gave up 13 cents to 90.86 dollars per barrel.

Brent North Sea crude for March delivery won 11 cents to 91.49 dollars a barrel. In earlier trades, both contracts had risen above 91 dollars per barrel.

"Oil prices moved back up above 91 dollars per barrel, boosted by improving financial market sentiment," said Barclays Capital analyst Kevin Norrish.

He added: "Equity market movements, economic growth expectations and speculation over future monetary policy measures are continuing to set the tone of trading in the market."

Global equities cranked back into gear on Tuesday, recovering some of their recent heavy losses as investors pinned their hopes on another US rate cut, dealers said.

Asian and European shares mainly rallied Tuesday after an overnight rebound on Wall Street, while the Paris market shook off some of its recent falls that were partly caused by the Societe Generale rogue-trader scandal.

On Wednesday, meanwhile, the US government's Energy Information Administration (EIA) will reveal the state of American oil inventories for the week ending January 25.

The weekly report is widely watched by the market because the United States is the world's biggest consumer of energy, followed by number two China.

In addition, the US Federal Reserve is forecast to slash its key interest rate on Wednesday in a move that could encourage US demand for crude oil -- and therefore could strengthen prices.

Further ahead, the 13-member Organisation of Petroleum Exporting Countries (OPEC) convenes in Vienna on Friday for a crucial meeting about the cartel's production levels.

"With the EIA data set for release tomorrow and the upcoming OPEC meeting, the market is unlikely to strike out dramatically in one direction or another," said Bank of Ireland analyst Paul Harris.

"Another day of range trading is expected with a slight upside bias" on Tuesday, he added.

OPEC, whose members together pump 40 percent of the world's oil, will very likely maintain current output levels amid fears that a potential US recession could dampen crude demand, analysts said.

President Bush, during a visit to the Middle East earlier this month, urged OPEC to increase output to help bring down prices, which had soared to a record high 100.09 dollars per barrel in New York at the start of January.

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