Oil prices steady after topping $80
LONDON: Oil prices steadied on Thursday after earlier topping 80 dollars as traders paused to assess the state of energy inventories in key consumer nation the United States.
New York's main futures contract, light sweet crude for delivery in February, rose 16 cents to 79.81 dollars per barrel, after earlier hitting a high of 80.36 dollars.
London's Brent North Sea crude for February slipped two cents to 78.29 dollars.
New York crude fell sharply on Wednesday to an intraday low of 78.37 dollars on fresh signs of weakening US energy demand, traders said.
"The oil price came under pressure (Wednesday) and fell after the release of the US inventory data to ... the lowest level since the start of the year," said Commerzbank analyst Carsten Fritsch in a note to clients.
"However, the price was able to recover lost ground ... and reached 80 dollars per barrel again, supported by benign equity markets."
Analysts said the sharp fall on Wednesday was triggered by the key US Department of Energy (DoE) report, which showed crude oil reserves soaring by 3.7 million barrels in the week ending January 8.
That was far more than most forecasts for a gain of 1.0 million barrels.
Distillates -- including heating fuel and diesel -- rose by 1.4 million barrels, the DoE said, confounding forecasts for a 1.8-million-barrel drop.
Distillates are in focus amid an ongoing cold snap in the United States. Forecasters have predicted milder weather for the weeks ahead.
"Stocks of distillates posted the first build-up in five weeks, which was surprising, given last week's low temperatures," noted Fritsch.
The United States is the world's biggest energy consuming nation and so has a major influence on oil prices.
However, "the DoE report was not all that pessimistic," said Serene Lim, an oil analyst with ANZ bank in Melbourne, adding that it indicated demand could soon pick up.
"The refinery inputs were up for most of the areas and the refineries were operating at a slightly higher rate than the past month," Lim said.
New York crude on Monday rose to a 15-month high near 84 dollars on the back of robust Chinese data but then went into reserve on news that Beijing was starting to cool its economy and the prospect of milder weather.
PVM oil analyst Tamas Varga warned that the market might have further to fall.
"The tightening of monetary policy in China, and what seems to be the end of a cold spell in the northern hemisphere, serve as a warning that prices in general could be overheated in the short-term," Varga said.
"The early euphoria seen last week and at the end of last year seems to be running out of steam and more downside pressure might be on the cards before the herd changes direction again."