Oil prices fall as market forecasts enough heating fuel

LONDON (AFP) - Oil prices fell as markets reckoned on there being enough heating fuel to meet demand in key markets once winter arrives, despite further drops in US stockpiles, analysts said.
The death of Palestinian leader Yasser Arafat and a threat to oil exports from major crude producer Nigeria helped to limit losses, they added.
New York's main contract, light sweet crude for delivery in December, lost 56 cents to 48.30 dollars a barrel in electronic trading at about 1115 GMT, after soaring by 1.49 dollars on Wednesday on initial reaction to falling US heating stocks.
Brent North Sea crude for December was 51 cents lower at 44.24 dollars in London, having closed up 1.04 dollars the day before.
Prices jumped Wednesday after the US Department of Energy said distillates -- mostly heating oil and diesel -- fell by 100,000 barrels to 115.6 million in the week to November 5, the eighth consecutive drop.
Heating oil inventories alone eased 100,000 barrels to 48.4 million barrels while diesel stocks were flat at 65.2 million.
Analysts said market reaction to the data was overdone, especially as US crude oil inventories increased by 1.8 million barrels to 291.5 million, about average for this point of the season.
"With the crude oil being there and most of the refiners now coming out of maintenance and coming back on stream, people don't believe there is actually going to be a shortage of heating oil this winter," said Richard Slape, energy analyst at stockbroker Seymour Pierce.
Prior to Wednesday's rebound in prices, New York light sweet crude had tumbled by about 14 percent in two weeks, and Brent by 15 percent as supplies showed signs of recovery after hurricane-induced losses in the Gulf of Mexico.
Slape said there could be a big rise in prices should the death of Arafat, who passed away overnight in a Paris hospital, lead to a big flare up of violence in the Middle East.
But he added: "Things have been problematic there for a long time now and I can't see that his death would change the situation so much for the worse that it results in another Arab oil embargo or something like that."
Elsewhere, traders were closely watching events in Nigeria, where the country's main oil unions on Thursday said their members would join next week's planned nationwide general strike and warned of disruptions to crude exports.
"There will be no activities at the oil rigs and export terminals," said Mojibayo Fadakinte, general secretary of the PENGASSAN union.
"This strike will be total since the government has refused to bow to the voice of reason," Fadakinte told AFP, blaming President Olusegun Obasanjo for failing to bow to workers' demands for a cut in fuel prices.
With exports of 2.5 million barrels per day, Nigeria is Africa's biggest oil producer and the sixth largest in the world. Its sweet, light crude is ideal for refining into petrol, and it supplies around 15 percent of US oil needs.

11/11/2004 - 11:56 GMT - AFP