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Crude edges higher in choppy trade
Oil edged higher in choppy trade yesterday after a fall to a three-month low but with a prediction for more comfortable supply next year taming gains.
- Reuters
- Published: 23:59 August 12, 2008
London: Oil edged higher in choppy trade yesterday after a fall to a three-month low but with a prediction for more comfortable supply next year taming gains.
US crude rose more than $1 to $116.05 a barrel and was trading 11 cents higher at $114.55 by 1435 GMT.
It had fallen to a session low of $112.48 a barrel, the lowest since early May.
London Brent crude was 32 cents up at $112.99.
The International Energy Agency in its monthly report left its oil demand growth outlook virtually unchanged for this year, while raising its 2009 forecasts slightly. But it cut its estimate for 2008 demand for oil from Opec and predicted supplies would grow.
Lower demand
"Demand for Opec oil is going to be lower than its production capacity, so the market is looking forward to seeing an inventory build, " Olivier Jakob with Petromatrix said.
US crude has fallen by about $35 from its record high above $147 struck in July. Support came as oil major BP said it had shut two oil and gas pipelines running from its Caspian Sea fields through Georgia but neither has been damaged by fighting there.
"BP shutting more piplines is supportive," a trader said.
Loadings of Azeri crude from the Turkish port of Ceyhan have stopped following an explosion at BP's Baku-Tblisi-Ceyhan (BTC) pipeline. The explosion was not linked to a five-day war between Russia and Georgia, through which the BTC link runs.
A stronger US dollar also added to the earlier impetus of selling in oil and other dollar-denominated commodities, which become more expensive for non-dollar investors as the US currency gains strength.
Oil to top $150 this year
Oil prices are likely to top $150 a barrel this year despite their recent slide on the dollar's rise against the euro and concerns that high prices may hurt growth in big economies, according to a Japanese commodity and energy expert.
A slowdown in US, euro zone and Japanese economies may dampen growth in China and other emerging markets, but underlying demand for oil from rapidly developing nations remains solid as they seek to catch up with developed countries, Akio Shibata, director at the Marubeni Research Institute, told Reuters.
"This is a transition period as China and other emerging countries move towards becoming developed nations, and their underlying demand will persist at least in the next 15 to 20 years to keep upward pressure on energy costs," Shibata said.
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