LONDON (AFP) - Oil prices rose after renewed concerns over heating oil stocks in the United States brought a halt, even if temporary, to a sharp slide in prices seen in recent weeks.
New York's main contract, light sweet crude for delivery in December, climbed by 20 cents to 47.04 dollars a barrel in electronic deals at 1210 GMT.
In London Brent North Sea crude for delivery in January increased by 42 cents to 43.18 dollars a barrel.
"Prices are holding this morning in response to yesterday's US data, which were surprisingly strong," said Bruce Evers, an oil industry analyst at Investec Securities.
"Heating oil stocks were up but less than expected. The same for crude."
The US Department of Energy said Wednesday crude stockpiles rose by 800,000 barrels to 292.3 million in the week to November 12, smaller than the 1.8 million expected by analysts.
Distillates stocks, which include heating oil, declined by one million barrels to 114.6 million, the ninth consecutive weekly fall, defying expectations of a one-million-barrel rise.
Reserves of heating fuel, which are considered crucial as the winter season looms, rose 700,000 barrels to 49.1 million barrels, dashing traders' hopes of a bigger rise ahead of the peak demand period.
"The output from refineries is not recovering as fast as the crude stock builds," said Richard Griffith, analyst at stockbroker Williams de Broe.
US inventories have been hit by recent supply problems in the Gulf of Mexico caused by the hurricane season, as well as by fast-growing demand and efforts by the OPEC producer group in recent years to limit output.
Although production difficulties in the Gulf of Mexico have now been largely resolved, refinery bottlenecks in the United States mean that oil companies are racing to process enough crude in time for the northern winter.
However, increasing optimism on markets that a supply crunch can be avoided has seen oil prices slump in recent weeks.
Although prices rose initially in response to the inventory report, energy analyst Daniel Hynes with the ANZ Bank in Australia said they were expected to fall again in the short term because US crude levels were on the rise.
"It's quite natural (that prices jumped); certainly the market has been focused on distillate stocks for the last few weeks," Hynes said.
"But I think once the full ramifications of crude oil inventories rising are factored into the market, we will see prices go down a little bit again."
11/18/2004 - 12:36 GMT - AFP