Oil prices fell on Friday after jumping above $61 a barrel the previous day in reaction the leadership change in the United States Congress and amid reports of an increase in fourth-quarter global energy demand.
The International Energy Agency (IEA) forecast a 2,6% jump in fourth-quarter global energy demand, citing high consumption in the US. The Paris-based IEA said US consumption is accentuated by the comparison to a year ago when the impact of Hurricane Katrina and mild weather curbed demand.
The IEA also said that demand for oil from the Organisation of the Petroleum Exporting Countries (Opec) is expected to rise 1,6-million barrels a day, due to lower output from non-Opec countries.
The outlook points to tighter market conditions and higher prices just as Opec oil-production cuts announced in late October take effect.
Light sweet crude for December delivery slipped 81 cents to $60,35 a barrel in trading on the New York Mercantile Exchange by midday in Europe, after jumping $1,33 a day earlier. Brent crude on the ICE Futures exchange dropped 89 cents to $60,43.
Heating-oil futures dropped nearly two cents to $1,7267 a gallon on the Nymex, unleaded gasoline futures fell nearly three cents to $1,5730 a gallon, and natural gas futures were down 20,5 cents to $7,750 per 1 000 cubic feet.
Oil prices have tumbled from a July high above $78 a barrel, trading in a range of $57 to $61 a barrel over the past month.
The crude price surge on Thursday came as US midterm election results showed that Democrats won control of both the House of Representatives and the Senate. Prices were also supported by some Opec ministers saying another production cut may be in order.
Vienna’s PVM Oil Associates said that in Thursday’s trading, ”the market was still mainly driven by a larger than expected draw of US distillate stocks … and Opec’s commitment to the announced cuts as well as increased talks of new cuts ahead”.
The market is considering whether Opec will make additional production cuts in December following a plan to reduce oil output by 1,2-million barrels a day starting November 1. Since the announcement in mid-October, analysts and traders have questioned how many of the 11 Opec members will deliver on the cuts they have promised.
Qatar’s Oil Minister, Abdullah al-Attiyah, said this week he is confident that all Opec members will comply with their recent pact to cut oil supplies.
Opec president Edmund Daukoru, also Nigeria’s Oil Minister, said this week that low prices may encourage the oil cartel to cut its output further, but it doesn’t have a specific price floor or band that it wants to defend. The group will discuss production at a December meeting in Abuja. — Sapa-AP