Oil inches higher above USD 87 a barrel in Asia

Subscribe to Oneindia News

Bangkok, Jan 27 (AP) Oil prices inched higher aboveUSD 87 a barrel today in Asia as traders weighed PresidentBarack Obama''s plans to boost the US economy against thepossibility that China, the world''s biggest energy consumer,will soon raise interest rates to slow growth and containinflation.

Benchmark crude for March delivery was up 7 cents atUSD 87.40 a barrel at late morning Bangkok time in electronictrading on the New York Mercantile Exchange. The contract roseUSD 1.14 to settle at USD 87.33 a barrel yesterday.

It was the first significant move higher for oil in aweek after prices tumbled on signs the Organisation ofPetroleum Exporting Countries, which produce about 40 per centof the world''s crude, could raise production to bring down theprice of oil.

Traders are now taking their cue from world stockmarkets, which moved higher on Obama''s call in the State ofthe Union address to close corporate tax loopholes and lowerbusiness tax rates - moves that could stimulate the world''sbiggest economy and boost demand for fuel.

But the possibility China may raise interest rates ortake other tightening measures before Lunar New Year holidaysbegin next week kept a lid on the oil price in Asian tradingtoday.

"There is still a strong probability that China''scentral bank will raise interest rates or increase reserverequirements again to cool economic growth there," energyconsultants Cameron Hanover said in a report.

Adding to the caution, the Energy Department said USstockpiles of oil and gasoline rose more than expected lastweek.

Crude supplies expanded by 4.8 million barrels to340.6 million barrels. Gasoline supplies rose by 2.4 millionbarrels to 230.1 million barrels, while demand in the pastfour weeks increased 1.1 per cent. Supplies of distillatefuel, which includes diesel and heating oil, declined by100,000 barrels to 165.7 million barrels.

In other Nymex trading in February contracts, heatingoil was up 0.1 cent at USD 2.671 a gallon while gasoline fell0.6 cent to USD 2.425 a gallon. Natural gas for March deliveryslipped 0.5 cent to USD 4.495 per 1,000 cubic feet.

In London, Brent crude was down 6 cents at USD 97.85 abarrel on the ICE Futures exchange. (AP)

Please Wait while comments are loading...