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Oil prices retreat as markets see slower economic growth
NEW YORK
Petroleumworld.com 1211 07World oil prices retreated Monday after a rally failed to push values above 90 dollars per barrel and traders looked ahead to expected slower global economic growth that could weaken demand.
New York's main oil futures contract, light sweet crude for January delivery, ended with a loss 42 cents at 87.86 dollars per barrel after trading as high as 89.80 dollars.
In London, Brent North Sea crude for January delivery fell back 60 cents to 88.04 dollars per barrel after an intraday high of 89.85.
Trading has been choppy in recent weeks but the trend has been mostly lower after a run up in prices to near 100 dollars a barrel.
"Oil demand growth seems to be waning and oil is looking more like a top is in place," said Phil Flynn at Alaron Trading.
Flynn said production also appears to be rising even as high prices and slower economic growth curb demand.
"Success in Iraq is rasing hopes of more oil production and there are signs that the (US) economy is slowing," he said.
"The credit crunch is crunching demand growth and not just in the US but in other parts of the world as well."
Oil prices had tumbled on Friday, closing down almost two dollars in New York, as concerns resurfaced that slower US economic growth could dampen crude oil demand, traders said.
Since striking recent record highs close to 100 dollars, crude prices have lost more than 10 percent in value.
Dave Ernsberger, Asia director of global energy information provider Platts, said the oil market traditionally cools at this time of year and there are now no strong factors that would lead to a rally."This is when you would expect prices to fall pretty significantly, actually," he said, describing the mood as "cautiously bearish."
Oil market experts say there are widespread fears of a US-led global economic slowdown that could depress demand for energy, especially oil.
Last Wednesday, prices initially spiked in reaction to a decision by OPEC, at a crucial meeting in Abu Dhabi, to leave its daily crude output quota unchanged at 27.25 million barrels.
Values subsequently fell back, which Ernsberger said probably reinforces bearish sentiment.
The Organization of the Petroleum Exporting Countries pumps about 40 percent of the world's crude supplies.
OPEC member Iran and China's Sinopec on Sunday signed a contract worth an estimated two billion dollars to develop a major Iranian oil field.
The Yadavaran onshore field in southwestern Iran will start producing 185,000 barrels of oil a day within the next seven years, said Iranian Oil Minister Gholam Hossein Nozari.
It is one of the biggest foreign energy contracts ever signed by Iran, but Ernsberger said the fields "are notoriously difficult to develop."
In a separate development, on Saturday the Iranian oil minister said his country has completely stopped carrying out its oil transactions in dollars, labelling the greenback an "unreliable" currency, the ISNA news agency quoted him as saying.
Story from AFP 10 2036 GMT 12 07
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