Oil prices steady near 22-month lows
Thursday, 20 November 2008
SINGAPORE, Nov 19 (AFP): World oil prices held steady today at their lowest levels in about 22 months but analysts said they will drop even lower because of worries over falling energy demand.
In late afternoon trade New York's main oil futures contract, light sweet crude for December delivery, was eight cents higher at 54.47 dollars a barrel after closing Tuesday in New York down 56 cents at 54.39 dollars, its lowest since January 2007. Brent North Sea crude for delivery in January was 14 cents lower at 51.70 dollars after settling down 47 cents at 51.84 on Wednesday in London.
Concern for slowing global economic growth and its impact on energy demand has led oil prices to plummet from record peaks above 147 dollars in July.
Prices should drop further to 43 or 44 dollars a barrel before rebounding along with the global economy next year, CFC Seymour securities in Hong Kong said in a report. A Tuesday forecast by the Centre for Global Energy Studies (CGES) that world oil demand would likely contract this year for the first time in 25 years weighed on market sentiment. The London-based energy market think-tank said prices have continued to fall despite the OPEC cartel's agreement last month to cut production by 1.5 million barrels per day. The price slide will continue "until real output cuts have been implemented," CGES said.
The Organisation of the Petroleum Exporting Countries (OPEC), which produces about 40 per cent of the world's oil, has so far failed to fully implement the output reduction that was to have begun on November 1, according to analysts. OPEC is to meet on November 29 in Egypt, and some members are calling for the cartel to further cut production in the face of plunging prices.
Somali pirates were reportedly demanding ransom Wednesday for a Saudi Arabian tanker loaded with two million barrels of oil and seized at the weekend hundreds of miles (kilometres) off the coast of Kenya.
But Jason Feer, of energy market analysts Argus Media in Singapore, said the amount of oil involved was not in itself large enough to affect the crude market, although piracy was having other consequences.
"What seems to be happening is that piracy incidents around Somalia have gotten so bad that companies are avoiding using that route," Feer said.
They now prefer a longer, more costly route, which could be potentially disruptive to Asian crude deliveries, he said.
In late afternoon trade New York's main oil futures contract, light sweet crude for December delivery, was eight cents higher at 54.47 dollars a barrel after closing Tuesday in New York down 56 cents at 54.39 dollars, its lowest since January 2007. Brent North Sea crude for delivery in January was 14 cents lower at 51.70 dollars after settling down 47 cents at 51.84 on Wednesday in London.
Concern for slowing global economic growth and its impact on energy demand has led oil prices to plummet from record peaks above 147 dollars in July.
Prices should drop further to 43 or 44 dollars a barrel before rebounding along with the global economy next year, CFC Seymour securities in Hong Kong said in a report. A Tuesday forecast by the Centre for Global Energy Studies (CGES) that world oil demand would likely contract this year for the first time in 25 years weighed on market sentiment. The London-based energy market think-tank said prices have continued to fall despite the OPEC cartel's agreement last month to cut production by 1.5 million barrels per day. The price slide will continue "until real output cuts have been implemented," CGES said.
The Organisation of the Petroleum Exporting Countries (OPEC), which produces about 40 per cent of the world's oil, has so far failed to fully implement the output reduction that was to have begun on November 1, according to analysts. OPEC is to meet on November 29 in Egypt, and some members are calling for the cartel to further cut production in the face of plunging prices.
Somali pirates were reportedly demanding ransom Wednesday for a Saudi Arabian tanker loaded with two million barrels of oil and seized at the weekend hundreds of miles (kilometres) off the coast of Kenya.
But Jason Feer, of energy market analysts Argus Media in Singapore, said the amount of oil involved was not in itself large enough to affect the crude market, although piracy was having other consequences.
"What seems to be happening is that piracy incidents around Somalia have gotten so bad that companies are avoiding using that route," Feer said.
They now prefer a longer, more costly route, which could be potentially disruptive to Asian crude deliveries, he said.