Oil flat as European markets open

29 December 2009

Written by Kim Bardsley

Crude oil prices held steady during the Asian trading session this morning (December 29th) and were selling at around the $78.75 (£49) mark as European markets opened.

Yesterday, the New York Mercantile Exchange's headline crude contract reached a five-week high amid expectations of a further reduction in energy inventories in the US.

Residents and businesses are bracing themselves against another cold snap passing over the East coast. Colder temperatures have driven up sales of heating oil and propane considerably in recent weeks, resulting in an overall drop in inventories.

Speaking to Reuters, Serene Lim, energy and commodity strategist at ANZ Bank, commented: "People are expecting a drop in U.S. inventories that has sustained oil prices at the moment and liquidity is quite low."

A poll by the news agency revealed expectations of further inventory draw-downs this week, continuing a three-week trend.

While reduced stocks have contributed to higher crude prices, heating oil has also climbed on the New York Mercantile Exchange in recent sessions.

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