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Crude oil futures dip in Asia on US stockpile news

TOKYO: Crude oil and product futures were weaker in Asia trading on Monday after news the U.S. Energy Department is seeking to put on the market millions of barrels of crude oil from its strategic reserve, traders said.

As of 0250 GMT, March crude on the New York Mercantile Exchange's (NYMEX) electronic ACCESS trading system had last traded at $26.80 per barrel, down 42 cents from Friday's floor settlement of $27.22 but up slightly from Monday's low of $26.75.

Monday's prices on ACCESS were also below Friday's intraday low of $26.95.

February heating oil was last at 91.00 cents per gallon, down 1.51 cents.

Traders said the main factor driving prices lower on Monday was a Department of Energy official's comment on Sunday that the department plans to place the Strategic Petroleum Reserve's crude oil with energy companies through an oil swap.

Under the plan, oil firms would submit bids to take oil from the reserve and then sell it in the market. Instead of paying the government in cash, the companies would replace the crude at a future date with more product.

Traders said the news was bearish with no other market-moving headlines over the weekend, and ACCESS prices moved rather sharply on relatively brisk volume of 1,122 lots.

"But you don't know yet if oil companies will agree to that," said a New York-based broker of the Energy Department's plan, adding that the market will likely stabilise later in Asian hours after initial bumps.

Legislation was introduced in the U.S. House of Representatives to allow Energy Secretary Bill Richardson to tap the strategic reserve when the Organisation of Petroleum Exporting Countries or other foreign oil producers limit crude supplies and raise energy prices.

Richardson has resisted pressure from politicians and businesses to sell oil from the reserve, saying it should be used only in times of supply emergencies and not to control prices.

Signs that Opec was set to extend output cuts well beyond the March deadline and severe winter weather in the United States had boosted crude and heating oil prices to nine-year highs.-Reuters