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Oil prices fall as Saudis hint at raising supplies
Source: Agencies |
January 25, 2011, Tuesday
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THE price of oil fell yesterday after the Saudi oil minister hinted that his country, the world's biggest oil producer, may raise supplies to put the brakes on higher oil prices.
Benchmark crude for March delivery lost US$1.24 to settle at US$87.87 a barrel on the New York Mercantile Exchange. The price of oil has fallen more than 3 percent since Thursday, when it was close to US$92 a barrel.
Saudi Oil Minister Ali al-Naimi said he expected world oil demand will increase this year to between 1.5 million and 1.8 million barrels per day. That's higher than forecasts from the Energy Information Administration and the International Energy Agency. JP Morgan analysts point out that al-Naimi's prediction of stronger demand probably means the Saudis are willing to raise production.
"It would seem more oil is on the way, which will reduce the supply deficit and will moderate the price gain," JP Morgan said.
Michael Lynch, president of Strategic Energy & Economic Research, said al-Naimi's comments imply that he thinks oil prices are too high, and the Organization of Petroleum Exporting Countries would take steps to bring them down.
"I think that's the first serious comment along those lines from anybody in OPEC," Lynch said. "He seems to be saying maybe the market needs more oil."
In other energy trading on the Nymex, heating oil lost 3.12 cents to settle at US$2.6231 a gallon. Gasoline futures lost 4.06 cents to settle at US$2.4379 a gallon. Natural gas for March delivery fell 14.5 cents to settle at US$4.598 per 1,000 cubic feet.
In London, Brent crude gave up 99 cents to settle at US$96.61 per barrel.
Benchmark crude for March delivery lost US$1.24 to settle at US$87.87 a barrel on the New York Mercantile Exchange. The price of oil has fallen more than 3 percent since Thursday, when it was close to US$92 a barrel.
Saudi Oil Minister Ali al-Naimi said he expected world oil demand will increase this year to between 1.5 million and 1.8 million barrels per day. That's higher than forecasts from the Energy Information Administration and the International Energy Agency. JP Morgan analysts point out that al-Naimi's prediction of stronger demand probably means the Saudis are willing to raise production.
"It would seem more oil is on the way, which will reduce the supply deficit and will moderate the price gain," JP Morgan said.
Michael Lynch, president of Strategic Energy & Economic Research, said al-Naimi's comments imply that he thinks oil prices are too high, and the Organization of Petroleum Exporting Countries would take steps to bring them down.
"I think that's the first serious comment along those lines from anybody in OPEC," Lynch said. "He seems to be saying maybe the market needs more oil."
In other energy trading on the Nymex, heating oil lost 3.12 cents to settle at US$2.6231 a gallon. Gasoline futures lost 4.06 cents to settle at US$2.4379 a gallon. Natural gas for March delivery fell 14.5 cents to settle at US$4.598 per 1,000 cubic feet.
In London, Brent crude gave up 99 cents to settle at US$96.61 per barrel.
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