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Oil prices wilt on warmer US weather outlook
AFP
NEW YORK
Petroleumworld.com 14 11 06
World oil prices slumped Monday on forecasts of unseasonably warm winter weather in the United States, the world's biggest consumer of energy, dealers said.
New York's main contract, light sweet crude for delivery in December, tumbled 1.01 dollars to close at 58.58 dollars a barrel.
In London, Brent North Sea crude for December delivery fell 66 cents to settle at 59.05 dollars a barrel.
"It looks clearly that demand growth is slowing down," Oppenheimer analyst Fadel Gheit said.
"Nobody knows how cold the weather is going to be. If it's not a very cold winter, if there are not supply disruptions, I think prices will continue to go lower," he said.
Meteorologists have forecast above-normal temperatures in the northeast United States, which has the most voracious appetite for heating fuel in the world.
US weather consultancy Meteorlogix said that demand for heating fuel from the northeastern region would be lower than normal in the week to November 18, which could lead to an increase in levels of distillate stockpiles.
US inventories of distillate products, such as heating oil and diesel fuel, fell 2.7 million barrels in the week ended November 3 to 138.6 million, according to government data.
"Many (market participants) decided that with stocks still plentiful and weather conditions predicted to be above normal for the next few days, that prices were unlikely to push much higher," said Sucden analyst Michael Davies.
"The market appears happy to remain rangebound for the moment, with the prospect of OPEC cuts supporting prices, but with many market participants waiting for actual evidence of a reduction in output, prices appear to be capped."
On Monday, Saudi Arabian oil giant Aramco informed its Asian customers of a fall in exports in December, following a similar reduction in November, according to analysts.
The Organisation of the Petroleum Exporting Countries last month said it would cut its total output by 1.2 million bpd, effective November 1, to put a floor under sliding oil prices.
Saudi Arabia is the biggest producer in the 11-nation cartel.
Iran's envoy to OPEC, Hossein Kazempour Ardebili, said Monday the cartel would cut its output quota further to bolster crude prices if its latest reduction has no effect on the market.
However, many traders have remained sceptical about OPEC's ability to implement the reduction in full.
"A lot of people don't think that OPEC is actually cutting production or has any intention of cutting production. Because if they do, they will be blamed for more of an economic downturn," he said.
Crude prices had sunk Friday on profit-taking after strong gains earlier in the week, as the International Energy Agency (IEA) trimmed its outlook for 2006 global oil demand growth to 1.1 percent from 1.2 percent.
The Paris-based IEA, a research think-tank mainly for developed countries, kept its predictions for 2007 broadly unchanged.
AFP 13 2035 GMT 11 06Copyright© 2006 AFP. All Rights Reserved.
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