Oil prices slide under 70 dollars

17th May 2010, Comments 0 comments

World oil prices tumbled Monday to their lowest levels so far this year on concerns about future oil demand and the strong dollar, analysts said.

New York's main contract, light sweet crude for delivery in June, fell 1.88 dollars to 69.73 dollars per barrel, after earlier hiting 69.27 -- which was the lowest level since October 5, 2009.

London's Brent North Sea crude for July dived 2.56 dollars to 75.37 dollars a barrel.

"There's some doubts about whether the Greek bailout is really going to work and if markets are really going to buy it," said Rick Mueller, director of oil markets at US-based consultancy Energy Security Analysis, cited by Dow Jones Newswires.

"There's more pain to come there," he added in a gloomy warning, indicating that prices could head even lower.

The oil market also extended last week's losses as the euro slumped on persistent fears over eurozone debt.

"(One) factor that has depressed oil prices is the continuing strength of the US dollar against the euro," said David Moore, a Sydney-based commodity strategist with the Commonwealth Bank of Australia.

"Fundamentally, oil markets are not particularly tight and so they were vulnerable to adverse sentiment and that is in fact what has occurred," he told AFP.

A stronger dollar makes dollar-priced crude more expensive for buyers using weaker currencies, denting demand, which leads to lower oil prices.

Moore said prices are likely to fall further as the market was "in a period of volatility and considerable uncertainty."

The market is meanwhile under pressure from rising inventories in the United States, indicating slow demand in the world's largest oil consuming nation.

Elsewhere on Monday, Iraq signed a deal with Chinese energy giant CNOOC and Turkey's TPAO to develop a major southern oilfield complex, its 11th accord with foreign energy firms as Baghdad aims to boost output.

CNOOC and TPAO agreed to be paid 2.30 dollars per barrel of oil extracted from the Maysan cluster of fields, which has proven reserves of 2.6 billion barrels.

Under the deal, output is projected to be ramped up to 450,000 barrels per day (bpd) from current production of around 100,000 bpd.

The Chinese firm will have an 85-percent stake in the joint venture, while TPAO holds the remaining 15 percent. The Iraqi government will have a 25-percent stake in the overall project.


© 2010 AFP

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