Oil falls towards $46 on gloomy demand outlook
NEW YORK |
NEW YORK (Reuters) - Oil fell toward $46 a barrel on Friday, as bearish demand forecasts outweighed the potential for OPEC agreeing to further production cuts at its weekend meeting.
An OPEC report released Friday showed world oil demand contracting faster than expected, and the International Energy Agency lowered its oil demand forecast for 2009.
U.S. light crude for April delivery settled down 78 cents at $46.25. London Brent crude settled down 16 cents at $44.93.
"Crude prices are down as demand is not too good, as borne out by the IEA forecast. Trading has been sporadic, up and down, as there appears to be no consensus at this point on what OPEC will do (this weekend)," said Kyle Cooper, director of research at IAF Advisors in Houston.
Oil prices have fallen $100 since record highs over $147 a barrel in July 2008 as the economic meltdown dented global energy demand.
OPEC meets on Sunday in Vienna to discuss moves to deal with falling oil prices.
U.S. President Barack Obama telephoned King Abdullah of Saudi Arabia, the OPEC kingpin, on Friday ahead of the meeting.
U.S. Energy Secretary Steven Chu said on Wednesday that he planned to tell OPEC ministers that higher oil prices will slow the recovery of the world economy.
The group's most influential member has not commented publicly about Sunday's meeting.
The producer group has already cut supplies by 4.2 million barrels per day since September and will decide whether to cut further or agree to stricter compliance with already-announced cuts.
Independent observers estimate that OPEC is currently adhering to about 80 percent of agreed cuts.
Oil has hovered between $33 and $50 since the beginning of the year after OPEC implemented and began showing compliance with output cuts.
OPEC's report on Friday said global demand would fall by 1.01 million bpd in 2009, revising its earlier forecast of a fall by 580,000 bpd.
However, the feeble world economy and a firmer oil price could persuade OPEC ministers to stick to existing supply cuts.
On arrival ahead of the meeting, ministers said they were worried about bulging inventories and the impact of the economic slowdown on fuel use, but were cautious about demanding action.
"We need to discuss how to drain inventories. We need to evaluate demand and see if it is necessary to take additional measures," Venezuela's Minister of Energy and Petroleum Rafael Ramirez told reporters.
The International Energy Agency said Friday that strict adherence to OPEC cuts already in place would be enough to shrink oil stocks in developed nations, even though demand is expected to contract further.
"Our view is that they don't really need to do very much more in terms of new targets," said head of the oil industry and markets division David Fyfe of the Paris-based IEA.
OPEC seaborne oil exports, excluding Angola and Ecuador, will fall to a five-year low in the four weeks to March 28, to 22.76 bpd, down 350,000 bpd, UK consultancy Oil Movements said in its latest weekly estimate on Thursday.
(Additional reporting by Robert Gibbons and Gene Ramos in New York, Christopher Baldwin in London, Maryelle Demongeot in Singapore and Alex Lawler and Barbara Lewis in Vienna; Editing by Marguerita Choy)
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