Oil prices fall further on strength of dollar

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World oil prices retreated further on Monday as the dollar strengthened and as enthusiasm waned over last week's eurozone debt deal, analysts said.

New York's main oil contract, light sweet crude for delivery in December, slid 51 cents to $92.81 a barrel.

Brent North Sea crude for December dropped 41 cents to $109.50 a barrel in London midday trade.

The market had rallied last week after a breakthrough eurozone sovereign debt crisis deal helped ease stubborn concerns that it could spark a new global recession.

However, prices closed lower on Friday and extended losses on Monday as dealers grew sceptical that the debt deal would fully resolve the eurozone's long-running crisis.

"Higher risk perception against the backdrop of weaker equity markets and the strength of the US dollar are putting some pressure on oil prices," said Commerzbank analyst Carsten Fritsch.

The European single currency slid to $1.3981 on Monday, making dollar-priced crude more expensive for buyers using the euro and in turn dampening demand for oil.

Traders were meanwhile looking ahead to a Franco-German meeting on Tuesday, where politicians from the two sides were expected to further discuss the debt rescue plan broadly agreed upon last week, dealers said.

"This meeting could be a key issue," said Phillip Futures commodity analyst Ker Chung Yang, who added that traders were also eyeing a US Federal Reserve meeting and the US jobs report both due later in the week.

Elsewhere on Monday, Kuwait's Oil Minister Mohammad al-Baseeri said world demand for crude oil was forecast to remain high, and would place pressure on global supplies -- even after Libya returns to pre-unrest production.

"Libya's return (to full production) is still very slow and is expected to take time to reach pre-crisis production," Baseeri told reporters on the sidelines of the Kuwait Financial Forum.

"But regardless of whether Libya's production returns or not, the world market will continue to need more oil ... increasing the burden on main OPEC producers," he said.

Baseeri said that based on OPEC estimates, world market demand is forecast to grow by between 1.0 and 1.5 million barrels per day "for the rest of this year and the beginning of next year."

The Organization of Petroleum Exporting Countries (OPEC), responsible for pumping out 40 percent of global oil, comprises 12 nations including Kuwait and Libya. The cartel holds it next output meeting in Vienna on December 14.

Libya was producing about 1.4 million barrels per day of mostly high-value light sweet crude before the uprising at the start of 2011.

OPEC sees Libya restoring production to one million barrels per day within six months, then attaining pre-conflict levels by the end of 2012.

© 2011 AFP

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