Oil prices retreat below $98
Foreign Desk Report

SINGAPORE—Oil retreated below 98 US dollars in Asian trade Thursday after rising to within striking distance of the symbolic 100-dollar level.
Dealers said investors were taking a cautious stance to protect their positions since US financial markets were closed Thursday for the Thanksgiving holiday.
In afternoon trade, New York’s main contract, light sweet crude for January delivery, rose 31 cents to 97.60 dollars a barrel from 97.29 dollars in late US trades Wednesday.
The contract had spiked to a new peak of 99.29 dollars on Wednesday, within touch of 100 dollars, on continued concerns over tight global supplies, dealers said. Brent North Sea crude for January delivery was 34 cents higher at 95.18 dollars a barrel. The contract had settled in London at 94.84 dollars on Thursday after jumping to an all-time pinnacle of 96.53 dollars per barrel.
David Moore, a commodity strategist with the Commonwealth Bank of Australia, said he had expected prices to rise after latest US government data showed a decline in the country’s crude reserves.
“I thought the inventory data would be supportive of the market,” Moore said. “It may have been investors were cautious ahead of the Thanksgiving holiday.” The US Department of Energy (DoE) announced Wednesday that reserves of US crude oil had sunk by 1.1 million barrels in the week ending November 16. Analysts’ consensus forecast had been for a gain of 750,000 barrels.
The DoE added that US reserves of distillates, including crucial heating fuel and diesel, dived by 2.4 million barrels last week. That was far heavier than market expectations for a drop of 450,000 barrels. Heating fuel demand is expected to pick up as the Northern hemisphere winter kicks in next month. The US northeast region is the world’s biggest user of heating oil.
Moore said the market can expect continued volatility in the weeks ahead as tight global supplies and geopolitical tensions in the Middle East continue to worry investors. “The oil prices are certainly volatile and the outlook is obviously subjected to a lot of uncertainty,” said Moore.
“For that reason, we will see oil prices move higher in the near term... it is still possible for oil prices to go above 100 dollars,” he said.
Crude oil prices have surged by about 64 percent since the start of 2007, energised by supply disruptions in key producers such as Nigeria, geopolitical jitters over the Iranian nuclear crisis, and strong demand from China and India.