LONDON – Crude oil futures rose Friday as markets remained wary about a possible strike by oil workers in Nigeria and potentially low heating oil supplies at the beginning of the Northern Hemisphere winter.
However, analysts said the markets still tended toward moving lower in the short term, with little fresh news to send prices higher.
Light, sweet crude for December was at US$47.46 per barrel on the New York Mercantile Exchange (search) on Friday, up 4 cents from its Thursday close but down from a session high of US$47.90. Oil prices had fallen US$1.44 to settle at US$47.42 Thursday.
In London, Brent for December delivery on the International Petroleum Exchange was up 6 cents at US$43.08 barrel.
A research note by Credit Suisse First Boston said the downtrend in oil prices had reasserted itself after the markets bounced on Wednesday's U.S. inventory data.
The World Markets Research Center in London said Thursday's drop and Friday's smaller rise showed a price correction.
"The US$55 per barrel prices seen in October were never warranted by the market fundamentals, and with no new supply threats appearing the market could not sustain the rally," it said. "However, prices are unlikely to slide below US$45 in the immediate future, given the still precarious distillate situation in the U.S. and the upcoming Nigerian general strike."
An Energy Department (search) report showed commercially available supplies of distillates dipped by 100,000 barrels last week to 115.6 million barrels, significantly down from year-ago levels.
Heating oil for December was down at US$1.3610 per gallon in Europe on Friday.
Markets have been concerned for some months about the world's limited excess capacity, now only around 1 percent above the daily consumption of 82.4 million barrels, leaving little room to maneuver in the event of a production outage.
Such a disruption could come next week as Nigerian unions vowed to defy a court order blocking a strike set for Nov. 16. Nigeria produces 2.5 million barrels a day and is the world's seventh-largest exporter. Nigerian workers are protesting rising domestic fuel prices and have said they aim to disrupt exports from the Niger Delta (search).
"Unrest in Nigeria might disrupt oil production, throwing us back to where we were last month," John Vautrain, vice president of U.S.-based energy analysts Purvin & Gertz in Singapore.
Oil prices reached an all-time high of US$55.17 per barrel twice in late October. While still higher than a year ago, they would have to reach US$90 per barrel to meet the inflation-adjusted peak set in 1980.
"All we need is a cold snap, particularly in the United States," said Kevin Norrish, head of commodities research at Barclay's Capital in London, or "evidence that China is returning to the market in force and buying."
Analysts are fretting over the supplies of distillates — heating oil, diesel, jet fuel and kerosene. Kerosene stocks have also fallen in Western Europe and Japan.
In America, home owners have already been warned they would have to pay at least 37 percent more for heating from October to March.