LONDON (Commodity Online): Oil prices remain largely range-bound with the tug-of-war between solid fundamentals and faltering macroeconomic picture continuing. January Brent slipped by $2.01 to $107.02/bbl, while the equivalent WTI contract fell by $1.84 to $96.17/bbl, said Barclays Capital in a Briefing.

Though prices have recovered somewhat on Thursday, the pressure from uncertainty concerning the euro area, China and global growth in general is likely to weigh on prices. The key fundamental data release on Wednesday was the US weekly oil data release, which showed a sharp tightening in the crude market.

Crude inventories have now decisively moved below the five-year average, with the overhang reducing by 7.4 mb in the latest data, bringing the deficit to 1.9 mb. US oil products, on the other hand, increased slightly relative to their five-year average, but still remain 8 mb below that average.

Overall, crude and product stocks, as ever, excluding the ‘other oils’ category, fell by 3.5 mb relative to the five-year average, bringing the deficit to 9.9 mb, which remains the tightest position since October 2008. Demand indications were relatively lacklustre, with the strength in the data remaining heavily centred on diesel. Implied distillate demand remains high, up y/y by 297 thousand b/d (7.7%) for November-to-date and up 120 thousand b/d (3.2%) for 2011-todate.

 By contrast, the weakness in gasoline persists, with demand down by 197 (2.2%) thousand b/d for November-to-date and down 224 thousand b/d (2.5%) for 2011-to-date. Despite the end of the harvest season, the nature of the US economic recovery and manufacturing trends and good movements all remain very distillate-friendly, and with the advent of the winter season, demand for heating oil should start to pick up seasonally, providing a further boost to the middle of the barrel.