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Oil prices under 60 dollars as IEA trims forecast
AFP
NEW YORK
Petroleumworld.com 11 11 06
World oil prices slipped below 60 dollars on profit-taking Friday after recent strong gains, as the International Energy Agency (IEA) trimmed its forecast for global demand, dealers said.
New York's main contract, light sweet crude for delivery in December, handed back 1.57 dollars to close at 59.59 dollars a barrel.
In London, Brent North Sea crude for December delivery fell 1.61 dollars to settle at 59.71 dollars a barrel.
Over Wednesday and Thursday, prices had gained well over two dollars a barrel both in New York and in London, touching peaks above 61 dollars owing in part to fears of more output cuts from the OPEC cartel.
"The IEA report was a little bearish but that doesn't mean much. So I think we just saw a lot of profit-taking," Alaron Trading energy broker Sean Lusk said.
"OPEC definitely doesn't want to see oil below 60 dollars a barrel," he added, and said: "If we see some colder temperatures coming into the winter, that should help support energy prices."
The IEA, an influential research group for 26 primarily Western nations, said in a monthly report that a US economic slowdown should not dent the world's overall appetite for oil and gas.
But it forecast a slight fall in world oil demand in 2006, anticipating growth of 1.1 percent this year instead of its previous forecast of 1.2 percent, to an average of 84.5 million barrels per day (mbpd).
In 2007, the IEA forecast demand to expand by 1.7 percent at 85.9 mbpd, slightly lower than a previous forecast of 86 mbpd.
But the report stressed: "Even if the US economy were to slow down, the world economy -- and global demand -- are likely to hold their ground for two reasons.
"On the one hand, Chinese investment-driven growth will arguably continue, especially given the considerable infrastructure needs of the forthcoming 2008 Olympics," the report said.
"On the other, increasing trade within Asia and between Asia and Europe has to some extent resulted in a degree of economic decoupling from the US."
Crude futures had surged Thursday in reaction to signs the OPEC cartel was following through on promised production cuts, and to a large fall in US inventory of distillates, including heating oil, analysts said.
The US Department of Energy said Wednesday that inventories of distillates, including heating oil and diesel, fell 2.7 million barrels to 138.6 million in the week to November 3. Analysts had expected a fall of only 800,000 barrels.
The DoE report had intensified doubts about the outlook for energy supplies after Saudi Arabian oil minister Ali al-Naimi had indicated Monday that OPEC could cut output further at its meeting in December.
The Organisation of the Petroleum Exporting Countries last month said it would cut its total output by 1.2 mbpd, effective November 1, to put a floor under prices which have fallen from record highs above 78 dollars.
Many traders have been sceptical about whether OPEC members would fully implement the cut, but the comments by al-Naimi and other cartel ministers lent credence to the cartel's official position.
"In terms of demand and supply balance, OPEC is currently supplying roughly 0.4 mbpd less than world demand requires. The IEA estimates the call (demand) on OPEC at around 29.8 mbpd," Bill O'Grady at AG Edwards said.
burs/jit/rl
AFP 102116 GMT 11 06Copyright© 2006 AFP. All Rights Reserved.
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