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Oil prices fall at end of record-breaking week
DATE:2007-9-15  FROM:  AUTHOR:  DOWN:2710
 


LONDON (AFP) - New York oil prices fell Friday on profit taking after striking a fresh record peak above 80 dollars a barrel overnight on concerns over tight supplies of US crude, dealers said.


 


New York's main futures contract, light sweet crude for delivery in October dropped 57 cents to 79.52 dollars per barrel.


On Thursday it reached a record high 80.20 dollars.


In London on Friday, the price of Brent North Sea crude for November delivery fell 38 cents to 76.74 dollars per barrel. The October contract expired Thursday at 77.40 dollars.


OPEC chief Abdalla Salem El-Badri said Friday that 80-dollar oil did not reflect the current demand and supply situation and was unlikely to last long.


"I don't think 80 dollars (per barrel) will last," El-Badri told journalists in Vienna. "The fundamentals do not support the price."


El-Badri said the current price of oil was "too high."


New York crude touched an all-time record high Thursday following the closure of several US refineries in the path of Hurricane Humberto, traders said.


"The shutdown of the refineries is likely to be very temporary and inevitably there will be profit-taking after the record highs," said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.


But he said prices would remain under pressure in the near-term because September is the peak hurricane month in the United States, the world's biggest energy consumer.


Winter in the northern hemisphere is also nearing which means demand for heating fuel would peak.


"In the near term, there are limited downside risks to the oil market," Shum said.


"Hurricane Humberto is a reminder that we are in the peak hurricane month, and if we look ahead into the coming winter months, petroleum demand also typically peaks.


"So oil supply and demand fundamentals are likely to remain tight, and these strong fundamentals have attracted investors back into the oil market," Shum added.


Oil prices began their record-breaking surge on Wednesday after news that US crude reserves dived lower last week, compounding concerns over tight global energy supplies despite OPEC's move to hike output.


The US Department of Energy revealed Wednesday that US crude inventories fell by a sharper-than-expected 7.1 million barrels in the week to Friday, 7 September.


The drop was almost three times heavier than analysts' consensus forecasts.


A decision on Tuesday by the Organization of the Petroleum Exporting Countries to pump an extra 500,000 barrels of oil per day from November would provide little relief to the tight market, analysts have said.


The record-breaking week for the oil market came despite an announcement by the International Energy Agency that it was lowering its predictions of global crude demand for this year and 2008 because of ongoing turbulence across financial markets.


The IEA, which acts as energy policy adviser to industrialized countries, reduced its demand forecast to 85.9 million barrels per day in 2007 and 88 million bpd in 2008, from its prediction last month of 86 and 88.2 million bpd respectively.

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