World
 
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Crude oil prices retreat
AFP
NEW YORK
Petroleumworld.com 10 27 06World oil prices slumped on profit-taking Thursday after gaining more than two dollars the previous day on renewed supply concerns, traders said.
New York's main contract, light, sweet crude for delivery in December, dropped 1.15 dollars to close at 60.25 dollars a barrel.
In London, Brent North Sea crude for December delivery lost 1.28 dollars to settle at 60.77 dollars a barrel.
"This volatility will continue," Oppenheimer analyst Fadel Gheit said.
"There is no question in my mind that the downturn is really in place, that oil prices have more downside than upside," he said.
But other analysts were less sure, noting plans by the Organization of the Petroleum Exporting Countries (OPEC) to cut output by 1.2 million barrels per day (bpd) from November 1 in an effort to support prices.
"Demand is increasing because of the cold weather," said Steve Rowles, an analyst with CFC Seymour in Hong Kong, referring to chilly temperatures in the US northeast, the world's biggest consumer of heating fuel.
"The colder it is, the higher the demand for heating oil and supply is falling because of the OPEC production cuts. The fundamentals of supply and demand are coming back into play," Rowles added.
The 11-nation OPEC promised last Friday to reduce its production, as crude prices hovered about 25 percent lower than record highs above 78 dollars reached in July and August.
On Wednesday, the US Department of Energy (DoE) said that crude oil inventories had unexpectedly fallen in the week to October 20, sparking a sharp rally in prices.
The figures showed the largest weekly fall since July but the DoE said crude levels "remain well above the upper end of the average range for this time of year."
Sucden analyst Michael Davies explained that OPEC production cuts would soon bite into supplies, which would put upward pressure on prices.
In addition to Saudi Arabia, "the United Arab Emirates along with Iran have also now informed their customers of future supply cuts," he said.
"Iran will be reducing its supplies by 176,000 bpd while Nigeria reported that it will extend its five percent cut in supplies already imposed voluntarily this month."
Libya said Thursday it would reduce oil output by 72,000 bpd to conform with the recent OPEC decision. And Kuwait added that it will cut oil output by 100,000 bpd starting on November 1.
"More OPEC members officially announced production cuts, which supplies significant credence to OPEC's efforts to trim excess world supplies," noted Fimat analyst Mike Fitzpatrick.
Saudi Arabia, which is to shoulder nearly a third of the output cuts, had already told its Asian customers it would reduce their November deliveries by eight percent.
But Oppenheimer's Gheit kept up scepticism about the OPEC announcement's impact on oil prices, noting that 1.2 million bpd was a small fraction of total global production of 84 million bpd.
"The rest of the world is producing as much as they can," he said of non-OPEC oil exporters.
"Everybody wants to take advantage of the higher prices: Russia is not cutting production, neither Norway, Mexico and Canada.
"Only OPEC is cutting production and guess what? Half of OPEC countries are not going to cut production and the other half is likely to talk about it but not really cut," Gheit said.
AFP 26 2105 GMT 10 06
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