Oil Prices Hold Above $80 A Barrel

VIENNA, Austria (AP) _ Benchmark oil futures held above $80 a barrel Wednesday after falling for three straight days from the near-record levels of last Thursday. <br/><br/>Light, sweet crude for November

Wednesday, October 3rd 2007, 8:23 am

By: News On 6

VIENNA, Austria (AP) _ Benchmark oil futures held above $80 a barrel Wednesday after falling for three straight days from the near-record levels of last Thursday.

Light, sweet crude for November delivery rose 38 cents to $80.43 a barrel by noon in European electronic trading on the New York Mercantile Exchange. The Nymex crude contract fell 19 cents to $80.05 a barrel Tuesday.

November Brent crude rose 30 cents to $77.68 a barrel on the ICE futures exchange in London.

Many analysts say investors taking advantage of the weak dollar drove oil prices to record levels above $83 a barrel in September. The supply and demand fundamentals of the oil market simply do not support such high prices, these analysts argue.

The dollar has been rebounding against several currencies, though, and dollar-denominated commodities have become less of a bargain.

Investors have also begun betting that oil prices have hit their highs for the year. Oil prices typically fall off between the peak demand of summer driving season and before winter demand for heating oil kicks in.

Still, prices could jump to new records on news of a hurricane or a bullish government petroleum inventory report. So, while keeping one eye on the dollar, futures traders are also anticipating Wednesday's inventory report from the Energy Department's Energy Information Administration.

Analysts surveyed by Dow Jones Newswires expect that crude inventories fell by around 400,000 barrels in the week ended Sept. 28, while gasoline inventories grew 400,000 barrels.

Refinery use likely rose by 0.4 percentage points to 87.3 percent of capacity, the analysts said, while inventories of distillates, which include heating oil and diesel fuel, likely grew 700,000 barrels.

Vienna's PVM Oil Associates also noted ``bullish news'' from Canada, where production from Suncor Energy's oil sands project was cut by 85,000 barrels a day due to a fire, one day after Syncrude Canada, the largest producer in the region, was forced to reduce output by 75,000 barrels a day.

Nymex heating oil futures rose marginally to $2.1636 a gallon (3.8 liters) while gasoline prices added less than a penny to fetch $1.9904 a gallon. November natural gas futures rose 4.3 cents to $7.470 per 1,000 cubic feet.

Natural gas futures bucked the rest of the complex Tuesday in the U.S., rising 37.7 cents to settle at $7.427 per 1,000 cubic feet. Some analysts think investors are reacting to a storm system in the southeastern Gulf of Mexico that they believe could threaten critical gas and oil infrastructure.

Other analysts said natural gas investors are only looking ahead to winter demand and betting the Northern Hemisphere winter will be colder than the last one.