Light oil prices trading under $70 after 9 straight days of falls

US Light crude oil prices are trading steady below $70 a barrel on Tuesday, after falling for a ninth straight session the previous day to an 11-week low on persistent worries over hefty stockpiles and sluggish oil demand. US Light crude oil futures for January delivery rose 24 cents to $69.75 a barrel by 1:30 a.m. EST, off a morning high of $69.91, while in London Brent crude oil futures was up slightly at $72.15.

Traders will scour the US weekly oil inventory report from the American Petroleum Institute (API) to see if stockpiles continue to rise, and a slew of economic data, including November industrial output figures, for clues on the health of the world’s largest economy.

Oil prices fell more than $8 a barrel from December 1st to 14th in the longest price slide since July 2001, as rising inventories in the US cast doubts over the pace of demand recovery in the world’s top energy consumer.

The US Federal Reserve’s monetary policy decision, to be announced on Wednesday after a two-day meeting, will also be closely watched. Interest rates are expected to stay unchanged at near zero, but the tone of any comments made will be analyzed for clues as to when the Fed might start tightening policy.

“We’ve seen an extremely modest rebound in oil so far, after nine straight sessions of losses, and the downside is still very much intact,” said Michelle Kwek, an analyst with Informa Global Markets in Singapore.

“Normally, demand perks up during the winter, but so far, demand has been abnormally weak, and this has been a major concern. We could see oil heading down toward $65,” she added.

U.S. heating demand this week may not provide much price support. The National Weather Service estimated that demand for heating oil — the favored heating fuel of the Northeast United States — would be about 1.3 percent below normal this week.

On the supply side, U.S. crude inventories were expected to have fallen by 2 million barrels last week, according to a preliminary Reuters poll of analysts.

Distillate stocks probably fell 700,000 barrels, while gasoline stocks were seen up by 1.1 million barrels.

The U.S. Energy Information Administration (EIA) will release its own inventory figures on Wednesday.

The Organization of the Petroleum Exporting Countries is expected to hold production targets steady at its next meeting on December 22. OPEC has been quietly putting more oil on the market since April, as prices rallied from below $33 a barrel last December.

On a brighter note, economic data due later could show that the U.S. economy is on a slow road to recovery.

The Federal Reserve will unveil November industrial production and capacity utilization data at 9:15 a.m. EST. Economists forecast a 0.5 percent increase in output, up from a 0.1 percent rise in October, while capacity utilization is expected to rise to 71.1 percent from 70.7 percent in October.

On Tuesday, the U.S. dollar held steady against a basket of major currencies, while Asian stocks wavered as investors turned cautious ahead of the Fed policy meeting. But Abu Dhabi’s decision to throw a lifeline to Dubai continued to bolster risk appetite.

Tags:  light oil prices, trading, US