Oil prices rise further, OPEC chief rules out new recession
Oil prices rose Tuesday before a key Slovakia vote on the eurozone bailout fund and as the head of OPEC insisted the market was well supplied with crude oil and that the world was not set for recession.
The optimism voiced by OPEC Secretary General Abdullah El-Badri came despite the cartel cutting its world demand forecasts for a third month running on uncertainty in the global economy and weaker oil demand from China and India.
In late London trade, Brent North Sea crude for delivery in November jumped $1.61 to $110.56 a barrel, reversing losses early Tuesday.
New York's main contract, light sweet crude for November, gained 68 cents to $86.09 a barrel.
Oil futures had rallied sharply on Monday, after Germany and France agreed over the weekend to deliver a comprehensive solution to the eurozone public debt crisis within weeks.
"The main focus for today remains on Slovakia... the only eurozone country yet to approve the new EFSF measures agreed in July. Parliament is due to vote later today," said Myrto Sokou, an oil analyst at Sucden brokers.
The other 16 eurozone members have already approved changes to revamp the 440-billion-euro European Financial Stability Facility, set up in May 2010 after Greece was bailed out to save it from default.
Tuesday's vote is clouded in uncertainty amid deep political divisions in Slovakia's governing centre-right coalition.
Traders remain on edge over the eurozone debt crisis, amid concern that it could spark a new economic downturn and slash global demand for energy.
The Organization of Petroleum Exporting Countries (OPEC), which pumps out 40 percent of the world's oil, expressed on Tuesday confidence that Europe's efforts to tackle its debt crisis would help prevent a new downturn.
"I don't think we will have a double-dip recession. Europe is working hard to revive the economy," OPEC's El-Badri told AFP on the sidelines of the industry's Oil & Money conference in London.
"The market is balanced, comfortable, prices are reasonable. We are not panicking," he added.
El-Badri also predicted that OPEC member Libya was expected to return to its "previous" level of crude production in the next 15 months or less. The nation's output has been slashed by recent unrest.
OPEC meanwhile revised downward its 2011 world oil demand estimate to 87.81 million barrels per day.
"The economic downturn is taking its toll on world oil demand, especially in the OECD (group of developed countries)," OPEC said in its monthly report.
Lower US demand, the eurozone debt crisis and delayed reconstruction efforts in Japan after its recent earthquake and tsunami disaster, had a bigger-than-expected impact on demand, the cartel said.
© 2011 AFP