Oil prices drop before US data, Saudi 'protests'

10th March 2011, Comments 0 comments

World oil prices fell back Thursday after spiking sharply higher a day earlier, as traders kept a wary eye ahead of US data and planned protests in oil kingpin Saudi Arabia.

New York's main contract, light sweet crude for delivery in April, dropped 32 cents to $104.06 a barrel.

Brent North Sea crude for April shed 51 cents to $115.43.

"Crude oil prices have been under pressure and corrected lower as geopolitical tensions in Libya slightly eased while some further profit taking emerged ahead of the US economic figures," said Sucden Financial analyst Myrto Sokou.

US weekly jobs data is due at 1330 GMT.

Stepped-up fighting in Libya, including the bombing of key oil infrastructure, sent London prices soaring on Wednesday but higher US crude stockpiles pressed New York prices down slightly.

The market was looking ahead to possible protests in Saudi Arabia. US experts have said that the world's biggest oil exporter seems unlikely to catch the contagion of Arab revolutions but nerves are on edge.

Security has been beefed up in the capital Riyadh, with extra police deployed on main streets and to sensitive areas, witnesses said.

"Protests have ... been announced (in Saudi Arabia) for tomorrow," Commerzbank commodities analyst Carsten Fritsch said on Thursday.

"Consequently, nervousness on the oil market should remain high and prices should rise again," he noted.

Cyber activists have called for a "Day of Rage" after prayers this Friday, on a Facebook page. Another page calls for a "Saudi revolution" to begin on March 20.

On both pages, activists are calling for political and economic reforms, jobs, freedom and women's rights.

Saudi Oil Minister Ali Naimi has downplayed market fears about global shortages, saying Tuesday that his kingdom has extra output capacity of 3.5 million oil barrels per day.

Oil prices spiked to 2.5-year highs in recent days amid escalating violence and supply shortfalls in Libya, a major producer and exporter of crude.

While levels are still below the all-time high of more than $147 a barrel reached in 2008, soaring oil prices have sparked fears of higher inflation that could dent growth as the global economy firms up its recovery.

Libyan oil output is down by more than two-thirds from 1.6 million barrels per day to just 500,000 due to the uprising against Moamer Kadhafi's regime, National Oil Corporation boss Shukri Ghanem said Wednesday.

"The market still sees the risk of contagion of events in Libya to neighbouring and Gulf countries," BNP Paribas analyst Harry Tchilinguirian said on Thursday.

© 2011 AFP

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