Oil prices drop as OPEC warns on weak demand

10th June 2011, Comments 0 comments

World oil prices fell on Friday as the OPEC oil cartel held steady its forecast for world oil demand growth this year, but warned that rising prices could dampen global consumption.

New York's main contract, light sweet crude for delivery in July, dropped $1.05 to $100.88 a barrel.

Brent North Sea crude for July retreated 50 cents to $119.07.

Crude futures had rallied in recent days after OPEC agreed to maintain its official output ceiling at a meeting in Vienna on Wednesday. But prices retreated heading into the weekend following Friday's demand warning by the Organization of Petroleum Exporting Countries.

"Should higher international oil prices persist, then this might... put more weight on the downward risk" to global oil demand and "this risk might be translated into a reduction of current growth by 200,000 barrels per day (bpd)," OPEC said in its latest monthly oil market report.

The cartel also said that it expected global oil demand to increase by 1.59 percent or 1.38 million bpd to 88.14 million bpd in 2011.

That is little changed from the cartel's previous forecast for an increase of 1.63 percent or 1.41 million bpd.

"A volatile oil market is making future oil demand estimates hard to manage," said OPEC, whose 12 member countries collectively pump 40 percent of the world's crude.

OPEC on Wednesday kept its official output target at 24.84 million bpd, where it has stood since January 2009.

That announcement immediately sent oil prices rocketing two dollars. Traders had speculated that the organization was going to boost its production quota to help cool oil prices and in turn boost economic recovery.

© 2011 AFP

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