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Oil prices slide as IEA lowers demand forecasts
NEW YORK
Petroleumworld.com 11 14 07
World oil prices fell sharply for the second day running Tuesday after the International Energy Agency lowered its global demand forecast for crude.
New York's main contract, light sweet crude for December delivery, slumped 3.45 dollars to close down at 91.17 dollars per barrel. The contract hit a historic peak of 98.62 dollars last Wednesday.
In London meanwhile, Brent North Sea crude for December delivery tumbled 3.15 dollars to a settlement of 88.83 dollars per barrel, falling below 90 dollars for the first time since November 1.
Brent crude struck an all-time high of 95.19 dollars last Wednesday.
"Oil prices were lower today... falling under pressure from more bearish comments," Sucden analyst Michael Davies said.
"This time it was the IEA who said that crude prices near 100 dollars per barrel were already slowing consumption."
The current surge in world oil prices could be losing momentum as demand declines and output from the OPEC producers' cartel picks up, the International Energy Agency predicted.
The IEA, which monitors energy policies in developed countries, lowered its global oil demand forecast for fourth quarter 2007, citing weaker economic activity in the United States, and pointed to an increase of 410,000 barrels a day in OPEC output in October.
"There are ... strong indications that high prices are depressing demand," the agency said in its monthly oil report, "which together with signs of higher output from Saudi Arabia, Iraq and Nigeria, have capped further price gains."
But the IEA cautioned that despite its downward fourth quarter demand revision, "supplies are likely to remain constrained through to the end of the year."
This strongly contrasted with comments by the oil minister of OPEC kingpin Saudi Arabia, who said that fears about a shortage of crude supplies were "groundless" and there was no reason for them to push prices to current record levels.
"The prices today have really no relation with the fundamentals," Ali al-Nuaimi told reporters in Riyadh ahead of an OPEC summit opening in the Saudi capital on Saturday.
"I believe OPEC in general and Saudi Arabia in particular have demonstrated their ability to respond very quickly to any disruption," Nuaimi added.
"So I don't foresee the tightness (in the market) that pessimists are talking about."
Nuaimi said the pessimism displayed by industry "gurus" and "experts" is damaging and "results in fluctuations of prices on the market."
He said Saudi Arabia was currently producing nine million barrels of oil per day but has an output capacity of 11.3 million bpd.
Nuaimi said the kingdom, the world's top oil producer, would within three months further expand its production capacity by around 500,000 bpd and raise it to 12.5 million bpd by 2009.
"I hope these figures will help reduce any apprehensions in the world, which are groundless, regarding the reliability of supplies," Nuaimi said.
US Energy Secretary Samuel Bodman called on the Organization of the Petroleum Exporting Countries to increase oil production ahead of this weekend's meeting.
Story from AFP 13 2131 GMT 11 07
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