World oil prices drop below $63

Agence France-Presse
Posted date: December 19, 2006

LONDON -- World oil prices fell below $63 on Monday as OPEC forecast the possibility of lower demand next year, but losses were limited by explosions at oil facilities in major crude producer Nigeria, dealers said. New York's main contract, light sweet crude for delivery in January, shed 78 cents to $62.65 per barrel in pit trading.
In London, Brent North Sea crude for February delivery slumped 98 cents to $62.51 in electronic deals.
Crude futures had soared by 3.6 percent in London and 4.3 percent in New York over last Wednesday and Friday, owing to a drop in US energy stockpiles and OPEC's move to cut output further.
Analysts blamed Monday's slide in part on OPEC's announcement that it sees downside risks to oil demand next year.
The Organization of the Petroleum Exporting Countries said in its monthly report earlier "risks for oil demand appear to be more weighed on the downside, given the dangers to global economic growth emanating from a visibly weakening US economy."

Also weighing on prices was the latest forecast from the US National Weather Service, which said temperatures in the US northeast, the world's largest heating oil market, would remain at above average levels through to Dec. 27.
"The weather forecast is predicting mild temperatures for the balance of the month so a softer heating demand outlook will somewhat undermine the case for buying," Fimat analyst Mike Fitzpatrick said.
Monday's losses may have been larger, however, were it not for news that an armed separatist group had detonated two car bombs at foreign-owned oil facilities in the southern Nigerian oil city of Port Harcourt and threatened to step up both the intensity and the "ruthlessness" of such attacks.
The blasts, which caused only minimal damage to property, hit Monday a Shell residential facility and property belonging to Agip of Italy, industry sources said.
The 11-member Organization of the Petroleum Exporting Countries meanwhile decided at a meeting in Abuja, Nigeria last Thursday to cut output by 500,000 barrels per day (bpd) from February.
But the Centre for Global Energy Studies doubted whether OPEC would carry out the cut.
"Based on its reading of the [supply and demand] fundamentals, the CGES is not convinced of the need for the cuts announced in Abuja and does not believe that they will, in fact, be implemented," the centre said in its latest monthly study released on Monday.
Elsewhere, the Norwegian oil company Statoil said Monday that it plans to merge with the oil and gas activities of Norsk Hydro, creating the world's largest offshore production group.
Together, Norway's two largest oil groups would have combined production of 1.9 million barrels per day in 2007 and 31,000 employees.
Norway is the world's third largest oil exporter, behind Russia and kingpin Saudi Arabia. - INQ7