Oil prices slip amid cloudy demand picture

15th July 2011, Comments 0 comments

World oil prices retreated on Friday amid demand uncertainty in light of a worsening eurozone debt crisis, tight supplies and growth worries for the United States and China, the two biggest energy consumers.

New York's main contract, West Texas Intermediate light sweet crude for delivery in August, fell 13 cents to $95.56 a barrel.

Brent North Sea crude for September shed 43 cents to $115.83 a barrel in London morning trade.

"Oil prices remain at the mercy of macroeconomic histrionics, a feature we expect to persist" over the coming weeks, said Barclays Capital analyst Amrita Sen.

"If the macroeconomic pessimism ratchets higher, oil prices could take another lurch down, especially if the shape and strength of the global recovery is once again put into question.

"In terms of oil demand itself, while the cyclical rebound is drawing to a close, underlying demand indications are far from worrisome with emerging market growth still robust," she added.

Financial markets meanwhile sat tight as the EU prepared to publish at 1600 GMT the results of major stress tests on Europe's troubled banking sector, which is facing pressures from the eurozone debt crisis now affecting Italy and Spain.

"Today, all eyes are on the release of bank stress tests," said Myrto Sokou, an oil analyst at Sucden Financial brokers.

Traders are speculating that energy demand could be hit in the European countries battered by the debt crisis, although this should be partly offset by tight supplies.

The International Energy Agency on Wednesday warned that the oil market needed more supplies for the third quarter of 2011, despite increased OPEC production and its own emergency stock release last month.

On June 23, the IEA authorised an emergency drawdown of its member nations' strategic oil stockpiles to replace lost output from Libya and to give the global economy relief from soaring energy prices.

"With non-OPEC supply outside the Americas struggling once again and Libyan crude remaining out of the market for a protracted period of time, supply continues to struggle to keep up with demand, thereby keeping the downside to prices well protected," added Sen.

The Organization of Petroleum Exporting Countries (OPEC), whose members include Saudi Arabia, Venezuela and Angola, pumps out about 40 percent of the world's oil supplies.

© 2011 AFP

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