World
 
|
Oil prices slide on slower US growth, Chinese demand
AFP
NEW YORK
Petroleumworld.com 10 31 06
World crude prices tumbled below 60 dollars a barrel on Monday, dampened by slowdowns in US economic growth and Chinese demand for energy, analysts said.
Prices retreated after rising earlier in the day owing to the threat of terrorist attacks on installations in Saudi Arabia, the world's biggest producer of crude oil.
New York's main contract, light sweet crude for delivery in December, dived 2.39 dollars to close at 58.36 dollars a barrel.
In London, Brent North Sea crude for December delivery plunged 2.40 dollars to settle at 58.68 dollars a barrel.
"The demand-side prospect may not be as rosy as people had found, especially after looking at the Q3 numbers out Friday for the US GDP," BMO Capital Markets energy analyst Bart Melek said.
US gross domestic product grew at its slowest pace in more than three years in the third quarter, the Commerce Department said Friday.
GDP in the world's largest economy expanded at an annual rate of 1.6 percent between July and September, down from 2.6 percent in the prior three months and a heady 5.6 percent in the first quarter.
"The weaker US GDP figure will cast a shadow on most commodity complexes this week, contributing to a largely weaker tone and helping cap substantial price rallies," Man Financial analyst Edward Meir said.
Crude futures were hit Monday also by news "that the rate of Chinese oil demand growth slowed down in September", Calyon analyst Mike Wittner said.
"Demand was only up three percent versus a year ago," he said.
"It's still solid and you can't pick a trend out of one month, but the market got used to seeing higher figures of about nine or 10 percent, so that could be why prices are down."
Prices could face further drops owing to an expected rebound in stockpiles of US crude heading into the northern hemisphere winter, analysts said.
Crude futures had risen in earlier Asian trade following news out of Saudi Arabia.
Oil installations in Saudi Arabia are a "high-probability potential target" for terrorist attack but tight security measures are in place to protect them, the Saudi interior ministry had said Friday.
Saudi Arabia, the leading member of the Organization of the Petroleum Exporting Countries, pumps more than nine million barrels of oil per day and sits on a quarter of global oil reserves. The kingdom operates the world's largest oil terminal at Ras Tannura in the Gulf.
Meanwhile, Kuwait's Energy Minister Sheikh Ali Jarrah al-Sabah said Monday that he believed oil prices have stabilised after a decision by OPEC to slash output by 1.2 million barrels per day (bpd) from November 1.
OPEC's planned cut will reduce the cartel's actual production to 26.3 million bpd from 27.5 million bpd currently, which is below its official quota of 28 million bpd, in place since July 2005.
But BMO's Melek said there was "some doubt on how quickly and how unified OPEC will be on actually putting cuts in place".
"People in the marketplace are expecting a build-up in inventories coming up Wednesday," he added, referring to a weekly report on US fuel stocks from the Department of Energy.
AFP 30 2047 GMT 10 06
Copyright ©2006 AFP All Rights Reserved.
Your
feedback is important to us!
We invite all our readers to share with us
their views and comments about this article.
Write to editor@petroleumworld.com
Any
question or suggestions, please write to:
editor@petroleumworld.com
Best
Viewed with IE
5.01+
Windows
NT 4.0, '95, '98 and ME +/ 800x600 pixels