Oil prices cool as traders digest market needs
Oil prices cooled Tuesday as the market digested the latest demand and supply forecasts from the International Energy Agency (IEA), traders said.
They said that prices remained volatile nonetheless following a record run-up in oil prices last week.
Soaring oil prices have triggered mass strikes by truckers in Spain and Portugal and caused protests in India amid rising unrest about high fuel costs.
US Treasury Undersecretary David McCormick said the Group of Eight industrialized nations would partly focus on ways to increase energy supplies to curb surging prices at a meeting later this week in Japan.
New York’s main oil futures contract, light sweet crude for July delivery, slumped 3.04 dollars to close at 131.31 dollars per barrel. Prices retreated after spiking almost two dollars in earlier trading.
The contract had rocketed to a record 139.12 dollars on Friday, soaring by 10.75 dollars, the largest single-day increase in history.
In London, Brent North Sea crude for July delivery fell 2.89 dollars to 131.02 dollars, after hitting a historic peak of 138.12 on Friday.
US President George W. Bush said Tuesday that Saudi Arabia’s proposal for a June 22 meeting between major oil producers and consuming nations to discuss soaring prices was “interesting.”
It is “an interesting idea by his majesty the King of Saudi Arabia,” Bush told reporters at the end of a European Union-US summit in Brdo Pri Kranju, near the Slovenian capital Ljubljana.
White House spokesman Tony Fratto, speaking in Washington, said the United States would participate in the planned meeting called for by Saudi Arabia on Monday.
In its closely tracked report, the Paris-based IEA said it now expected global oil demand to average 86.8 million barrels per day this year, 80,000 fewer barrels than its estimate last month.
“The IEA cut demand growth by 80,000 barrels a day from last month’s forecast, to its lowest growth level since 2002 amid the slowdown in the US economy and as a result of reduced fuel subsidies in some Asian economies,” said analyst Nimit Khamar at the Sucden brokerage in London.
“However, this reduction in oil demand was overshadowed by IEA’s reduced forecasts for non-OPEC growth to 455,000 barrels per day, down from their previous forecast of 680,000 barrels a day,” he said.
The IEA, the oil market watchdog for industrialized countries, also sent a strong message to reassure markets that it would release strategic oil stocks if supplies were severely disrupted in any way.
However, the price surge last week to almost 140 dollars per barrel “is not just about geopolitical risks — the supply situation remains tight,” the IEA said, signaling it was uncertain about how supply and demand will play out in the next six months.
Crude futures had fallen on Monday from last week’s record heights after Saudi Arabia, the OPEC cartel’s biggest producer, called for talks with consumer nations to discuss ways to deal with skyrocketing oil prices.
The OPEC kingpin reiterated its readiness to meet any increase in demand.
The Organization of the Petroleum Exporting Countries, which produces 40 percent of world oil supplies, argues that record-breaking prices have been fueled by speculators and the weak dollar.
Source: AFP
Tags: fuel costs