Oil drops, high prices stoke demand concerns
Oil prices fell Monday on profit-taking but remained at elevated levels, prompting key industry bodies to express concern about the impact of high energy costs on both demand and economic growth.
New York's main contract, light sweet crude for delivery in May dropped $1.27 to $108.39 a barrel.
In London, Brent North Sea crude for June shed $1 to $122.45.
"After three days of gains, markets are looking to lock in some of the profits," Ong Yi Ling, an investment analyst for Phillip Futures in Singapore, told AFP.
Despite the falls, OPEC secretary general Abdullah El-Badri said the oil cartel was "concerned" by high crude prices.
"We see that there is a $15-20 premium risk at this time," Badri told reporters in Kuwait.
He was speaking ahead of a roundtable meeting for Asian energy ministers who went on to discuss the impact of high oil prices on the economy.
Badri's comments also came after the head of the International Energy Agency, Nobua Tanaka, said oil prices were "very high" and that his group was alarmed that this could undermine economic growth and crude demand.
In response, Gulf oil producers on Monday assured consumers of sufficient supplies to help stem rises in prices fuelled by sweeping unrest in the Middle East and speculative trade.
"Certainly, Saudi Arabia's position in the world oil market is based on its commitment to maintaining spare capacity for the sake of price and market stability," Saudi Oil Minister Ali al-Naimi told the roundtable meeting.
Naimi said the kingdom had spare capacity of more than 3.5 million barrels per day which Riyadh can use whenever the need arises.
Kuwaiti Oil Minister Sheikh Ahmad Abdullah al-Sabah said the situation is different from 2008, when oil prices shot to an all-time high of 147 dollars, because of abundant spare capacity.
But he said the "volatility of prices poses a significant dilemma," attributing the sharp rise in prices to a combination of factors.
"The increase in oil prices is due to the loss of large volumes of sweet crude from the market (Libyan oil), expansionary monetary policy, a weak dollar, fear of spread of political unrest to other producers and the resilient demand in ... Asia," the Kuwaiti minister said.
He also said that oil traders are driving prices higher and amplifying price signals amid rampant speculative trade.
© 2011 AFP