/ 23 November 2007

Oil prices slip further from record heights

World oil prices fell on Friday after a momentous week that saw record peaks close to $100 as traders worried about tight energy supplies and geopolitical jitters in key producer countries.

New York’s main contract, light sweet crude for January delivery, sank 95 cents to $96,34 per barrel. The contract had hit an historic $99,29 on Wednesday.

Elsewhere on Friday, London’s Brent North Sea crude for January delivery fell 48 cents to $94,02 per barrel, after striking an all-time peak of $96,53 on Wednesday.

This week, crude futures failed to top $100, despite United States government data that showed American energy stockpiles fell more heavily than expected last week.

The rally fizzled out amid the US Thanksgiving holiday weekend, with New York’s financial markets shut on Thursday.

Prices also fell on indications that some member nations of the 13-strong crude exporters’ group Opec (the Organisation of Petroleum Exporting Countries) might increase their output.

“Oil futures were lower [on Friday] … on signs that some Opec members may be raising output ahead of the cartel’s meeting on December 5,” said Sucden analyst Michael Davies.

“However, another Opec output increase is no certainty as many members have said that more crude is unlikely to calm a rally driven by speculators and geopolitical tensions.”

The price of oil has surged by about 64% since the start of 2007, supported by supply disruptions in key producers such as Nigeria, strong demand from China and India, and jitters over the Iranian nuclear crisis.

In Vienna on Friday, the United Nations atomic watchdog sat down to its second and final day of debate on Iran’s disputed atomic drive at a board meeting, which was expected to be wrapped up by the afternoon.

Western nations, led by Washington, accuse Iran of secretly trying to build a bomb, a charge Iran vehemently denies, saying it is only seeking a technology to generate electricity for a growing population.

“Iran’s top nuclear negotiator Saeed Jalili is set to meet EU foreign policy chief Javier Solana on November 30 over Iran’s nuclear programme,” Davies added.

“The outcome of the meeting could lead to Iran facing wider sanctions, which could result in more geopolitical related support for oil.”

This week, meanwhile, oil prices have won support from the troubled US dollar, which has struck a series of record low points against the surging euro.

A weak American currency encourages demand for dollar-denominated commodities, like crude oil, because they become more attractive to investors using stronger currencies. — AFP