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23 Jul 2007 10:18
Oil prices fell on Monday, on expectations of higher United States refinery production and after remarks by Opec that it is ready to pump more oil if needed.
London Brent crude, currently seen as more representative of the world market, slid 36 cents to $77,28 a barrel by 4.44am GMT, after easing three cents on Friday. US crude for September traded 22 cents lower at $75,57.
The Organisation of the Petroleum Exporting Countries is concerned about the potential impact of near-record oil prices on the world’s economy, but has seen little sign that growth has been hit by higher energy costs, the group’s president said on Sunday.
Opec stands ready to pump more oil if needed, but it is not clear whether the group will need to boost output before the end of the year, Opec president and United Arab Emirates Energy Minister Mohammed al-Hamli told Reuters in an interview on Sunday.
But analysts said Opec’s comments are unlikely to have a lasting impact on oil prices as supply worries continue to loom.
“We have seen those comments from Opec for the last three years and it seems like these are merely attempts to reassure the market that supply will be available,” said Gerard Burg, an oil and gas analyst at National Australia Bank.
“These comments does not mean that there is going to be a change in Opec policies or a move to increase supply soon.”
Despite supply concerns and surging oil prices, Opec has yet to relax supply curbs in place since last November.
Even as oil prices hover at near record highs, global economies are proving resilient to surging energy prices and oil consumption has remained strong.
Economic growth in China, the world’s second-largest oil consumer, accelerated to 11,9% in the second quarter, an 11-and-a-half-year high, though Reuters calculations show apparent oil demand growth was more tepid at 2,1% in June
Crude imports by China still rose nearly 20% in June from a year ago, while imports by South Korea, the world’s fourth-largest buyer, rose 3,8% in June.
Analysts said oil prices were also pulled down by a report which cited Opec’s research division as saying that a fair price for both oil producers and consumers would be around $60-$65.
“A price of $60/$65 is appropriate for consumers and producers, because it boosts means of investment in the oil industry in light of growing demand for oil in the coming years,” state firm Kuwait Petroleum Corporation’s monthly newsletter quoted the head of Opec’s research division as saying.
News of Chevron restarting a 200 000 barrel-per-day (bpd) crude distillation unit at its Los Angeles-area refinery in California also weighed on prices.
The recent gain in oil prices has been supported by rising demand in US and a spate of refinery outages that have drained inventories in the world’s top consumer.
A US government report last week showed gasoline stocks unexpectedly fell by 2,3-million barrels in the week to July 13.
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