Oil sector weak

Sector weak this morning as expected..Oil is trading pretty much flat..Was up earlier in Asian trade but gains have evaporated ahead of direction from US this afternoon. BOE and ECB rates decisions at lunchtime likely to be containing the markets too especially in the light of the rate hike surprise from BOE last time. I'd like to see some direction from the US before taking a position . Risk is for further downside during the session in oil shares due to uncertainty..

Paper round

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Oil down about 2%

What started out as an up day for oil prices has ended lower. Hopes of oil going higher were hinged on the distillates showing big drawdowns on the back of the cold weather in the US. The report pretty much matched expectations and gave ammo to the bears. I'm a little bit cautious on the sector and finished the day square. I want to see where oil finds some support. With the cold weather likely to pass in the next few weeks, are we going to see a return of focus on the bearish fundamentals (ample supplies)? Or will oil find some support around 55 with news of OPEC cuts and Iran etc. Heard some traders @ Nymex mention they think we are still trending higher..Will be interesting to see where we close tomorrow and Friday. We should see weakness in the oil sector tomorrow until there is some firm direction on the price of oil.

Oil rises...

Oil rises as traders await US weekly stocks dataLONDON (AFX) - Oil edged up as traders prepared for a US weekly stocks report that is expected to show a decline in distillate stocks following a recent cold snap in the Northeast of the country.At 9.44 am, front-month Brent North Sea crude contracts for March delivery were up 67 cents at 59.08 usd a barrel, after gaining 32 cents to settle at 58.42 usd yesterday.Meanwhile, front-month New York light sweet crude contracts for March delivery were up 60 cents to 59.49 usd a barrel, after rising 14 cents to close at 58.88 usd yesterday. The US Energy Information Administration will release its weekly report at 3.30 pm today.Analysts expect it to show distillate stocks, including heating oil, to have dropped by 3.2 mln barrels for the week ending Feb 2. However, crude oil inventories are expected to have risen by 1.4 mln barrels."The recent bout of cold weather reports are eating into heating oil and distillate supplies and have been driving the market higher," said CMC Markets trader Andrew Henderson.

Oil

Oil prices settle near $59 a barrelNEW YORK (AFX) - Oil prices edged higher Tuesday, lifted by chilly weather across the Midwest and Northeast United States that is boosting heating fuel demand.Traders expect that the recent cold temperatures will be reflected in the heating oil stockpiles, which the Energy Department will be reporting on Wednesday. The market is predicting a large drop in heating oil stocks, but increases in crude oil and gasoline.Crude prices stayed under the $60-a-barrel mark as the cold weather and dropping heating fuel inventories are mostly priced into the market already, analysts said."If you haven't bought the market already, you've pretty much missed the whole move," said Michael Guido, director of commodity strategy in New York for bank Societe Generale. "It can't get any colder -- all the risk is to the downside. Any kind of breakup in the cold we're getting, and it could easily drop a dollar."Light, sweet crude for March delivery rose 14 cents to settle at $58.88 a barrel on the New York Mercantile Exchange, after rising as high as $59.99 a barrel in electronic trading. The contract on Monday slipped 28 cents to settle at $58.74 a barrel.Oil hasn't closed above $59 a barrel yet this year.A bone-chilling cold wave has been blasting across the northern Plains of the United States to the Northeast, contributing to heavy snowfall and below-zero temperatures as far south as West Virginia. Colder-than-normal temperatures are expected to linger in the Northeast and Midwest through Feb. 19, the National Weather Service said Tuesday.Brent crude on the ICE futures exchange rose 32 cents to settle at $58.42 a barrel Tuesday.In Nymex trading, heating oil futures rose 1.53 cent to finish at $1.6909 a gallon; gasoline prices rose 1.26 cent to settle at $1.5725 a gallon; and natural gas prices slipped 1.8 cent to end at $7.616 per 1,000 cubic feet.Nymex crude oil prices had fallen as low as $49.90 a barrel last month after unseasonably warm weather. But the recent cold spell and ensuing strong demand for heating fuels is expected to result in another big drop in U.S. distillate stocks in Energy Department's weekly petroleum inventories report, which will be released Wednesday.Citing the U.S. National Weather Service, Vienna's PVM Oil Associates said that because U.S. heating oil demand will be around 20 percent above normal next week, prices will likely be supported in the coming days.The government's weekly report on natural gas in storage will be released Thursday. Natural gas is a more common heating fuel than heating oil in the United States, especially in the Midwest.Retail gasoline prices started climbing higher last week, as crude oil prices jumped back to to the high $50s. The average U.S. price for a gallon of regular was $2.181 on Tuesday, up from $2.177 on Monday, according to AAA.Politicals tensions in oil producing nations including Nigeria and Iran have also been instrumental in keeping prices afloat lately, but traders are focusing more on weather in the United States, the world's biggest energy consumer.Militant attacks on oil facilities in the Niger Delta have caused Nigeria, a major supplier of oil to the United States, to slash production. On Tuesday, Nigerian President Olusegun Obasanjo called a high-level meeting scheduled for Thursday to address the recent upswing in violence.Also buoying oil prices over the past week has been stronger-than-expected economic data out of the United States, including last week's gross domestic product data and employment figures."That's renewing the argument for robust demand and good demand growth for '07," said John Kilduff, analyst at Fimat USA.

Paper round from Sharecrazy and Citywire

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and

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BP (AFX)

BP Q4 profit falls; sets higher output, capex goals UPDATE(Adds comments on gas prices, outlook)LONDON (AFX) - BP PLC reported weak earnings in the fourth quarter, reflecting a fall in output, US gas prices and refining margins, but revealed increased output goals over the next five years and capital spending for 2007.Clean earnings in the three months to December fell to 4.047 bln usd from 4.985 bln previously, well in line with the forecast range of 3.605-4.105 bln usd and above the consensus figure of 3.868 bln.This was after adding back non-operating charges of 152 mln usd in the fourth quarter, as against the charges of 553 mln usd it booked a a year ago.Replacement cost profit fell to 3.895 bln usd from 4.432 bln after deducting the charges. BP also revealed it is aiming for 3.8-3.9 mln barrels of oil equivalent per day in 2007, 4.0 mln boepd in 2009, and 4.3 mln boepd by 2012, which assumed a 60-usd a barrel price scenario.Volumes for 2006 had been disappointing, as disruptions at its major oil and gas fields reduced output to 3.926 mln boepd from 4.014 mln previously, slightly below its reduced guidance of 3.95 mln boepd.In the fourth quarter, output fell to 3.84 mln boepd from 4.022 mln last time, cutting the profits at the group's key exploration and production unit to 5.063 bln usd from 6.566 bln.BP is upgrading capital spending to 18 bln usd in 2007 from 16.9 bln in 2006 in order to support its growth ambitions.At end-2006, its proved reserves replacement ratio, calculated based on the US Securities and Exchange Commission rules, reached 113 pct."Our strategy is unchanged. We continue to execute it with discipline and focus," said chief executive Lord Browne, who will be retiring in July and will be replaced by Tony Hayward, the head of the E&P business. At the refining and marketing division, BP made a profit of 312 mln usd as against a loss of 165 mln, following the progressive recommissioning of the Texas City refinery after storm-related shutdowns.The Texas refinery reported a loss of 1.1 bln usd in the full-year, BP said.Refining margins have been weak, falling to 6.30 usd a barrel in the fourth quarter and around 6 usd so far in the first quarter of 2007, said the group, adding the near-term outlook will depend on the weather and a relatively heavy US refinery turnaround programme.The outlook for the retail margins, meanwhile, remains uncertain following the deterioration in the fourth quarter relative to the third, it said.Turning to commodity prices, Browne said crude oil prices averaged 59.60 usd a barrel in the fourth quarter, 10 usd a barrel below the third quarter, but still slightly above the same period last year.Demand should remain strong, helped by sustained growth in the world economy, particularly Europe and Asia, he added."The near-term global outlook is for continued growth at close to current rates," Browne said.US gas prices may find temporary support for the rest of the winter, following the declines over the past months, but high inventories are likely to continue to weigh on prices, he added. In the UK, gas prices were also on the decline, amid high inventories and the completion of new infrastructure projects. However, the risk of "temporary price spikes due to late-winter cold spells persists", said Browne.Despite the fall in earnings, BP raised quarterly dividends to 10.325 cents a share from 9.375 cents previously, or 5.258 pence a share, up from 5.288 pence last time.