World
 
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Oil prices near six-month lows
AFP
NEW YORK
Petroleumworld.com 09 15 06
World oil prices dropped to their lowest levels in almost six months Thursday after news of a strong buildup in US natural gas reserves and the suspension of a strike by oil unions in Nigeria.
New York's main contract, light sweet crude for delivery in October, fell 75 cents to close at 63.22 dollars per barrel, after briefly dipping below 63 dollars -- the lowest point since March 23.
In London, Brent North Sea crude for October delivery shed 75 cents to settle at 62.24 dollars per barrel. Earlier Thursday Brent hit 61.96 dollars -- also the lowest since March 23.
"On the whole the market is trying to find out where the floor is," Global Insight analyst Simon Wardell said, referring to the level at which prices will stop falling.
Markets also reacted to news that the National Union of Petroleum and Natural Gas Workers and Petroleum and Natural Gas Senior Staff Association had called off their strike in Nigeria, Africa's biggest crude producer.
They had initially called a three-day strike from Wednesday to protest unrest in the volatile Niger Delta region, home to the country's massive oil wealth.
A report showing a strong build in US natural gas inventories -- which are now 12 percent above normal levels for the season -- highlighted the overall easing of tensions in the energy market. Natural gas futures fell below five dollars per million British thermal units (mBbtu), the lowest since 2004 and a 10 percent drop in a single day.
"The natural numbers this morning are certainly weighing on the market," said Mike Fitzpatrick at Fimat USA.
"It was a huge build. Natural gas prices are falling and dragging the rest of the market down ... it looks like the psychology right now favors lower energy prices."
Despite the latest falls in oil prices, the IMF said on Thursday that strong US and Chinese economies as well as an array of supply issues look set to keep oil prices high next year, with markets pointing to a price of 70-75 dollars a barrel.
The International Monetary Fund warned that a further escalation in oil prices beyond that level cannot be ruled out in the event of deteriorating tensions involving Nigeria, Iran or other key crude suppliers.
"Oil price increases over the past eight months have reflected buoyant global activity, which has tempered the response of oil demand to higher prices and supply concerns related to geopolitical uncertainties," the IMF said in its semi-annual World Economic Outlook report.
"Looking forward, with spare capacity expected to remain tight, futures markets suggest that prices of crude oil will remain high for the remainder of 2006 and 2007."
Crude futures spiked to record high points above 78 dollars per barrel in July and August.
AFP 14 2042 GMT 09 06
Copyright ©2006 AFP. All Rights Reserved.
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