Oil price slip after recent spike close to $100

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World oil prices drifted lower on Monday in thin trade after jumping close to $100 per barrel last week, while OPEC forecast higher demand growth for this year.

Brent North Sea crude for delivery in March slipped 73 cents to $97.65 in late afternoon London trade. The February contract spiked to $99.20 on Friday ahead of its expiry.

New York's main contract, light sweet crude for February delivery dropped 56 cents to $90.98 a barrel.

Trading volumes were light given the the Martin Luther King Day public holiday in the United States. Floor trading was shut in New York while electronic deals will finish early.

"Crude oil prices have recently consolidated around the $91 per barrel area as the uncertain conditions in the eurozone prompted investors to some profit-taking," Sucden analyst Myrto Sokou said.

"However, the recent upside momentum is likely to continue amid expectations of a strong corporate earnings results season."

Optimism about the global economic recovery and interest from bullish investors have been the twin drivers of the gains in prices over the past week, analysts said.

"Crude futures are quite close to $100 and speculative traders have generally gone bullish on the market," said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.

"There are many investors betting on accelerating global economic recovery and so we have got these high prices," he told AFP.

The rise in global oil prices has been attributed to a harsh winter hitting Europe and parts of North America, as well as growth in China and other developing nations.

The OPEC oil cartel, which pumps 40 percent of world crude, revised upwards its 2011 world demand growth estimate on Monday, given the pace of global economic recovery and cold winter weather in the northern hemisphere.

The Organization of Petroleum Exporting Countries said it was pencilling in world oil demand growth of 1.23 million barrels per day (bpd) or 1.43 percent to 87.32 million bpd for this year, compared with 1.37 percent previously.

"The magnitude and the speed of the world economic recovery will have a remarkable impact on world oil demand this year," OPEC said in its latest monthly bulletin.

Crude prices first touched $100 a barrel in January 2008 and major oil producer Iran said Sunday it was possible that this would happen again.

"The price of $100 is not unrealistic in this situation," Iran's Oil Minister Masoud Mirkazemi, who currently heads OPEC, told reporters on Sunday.

"Even if the oil price crosses $100 a barrel there is no need for an emergency OPEC meeting. Some OPEC members believe there is no need for an emergency meeting even if oil reaches 110 or 120 dollars a barrel."

Iran is OPEC's second largest crude exporter behind Saudi Arabia and holds the world's second largest gas reserves.


© 2011 AFP

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