London: World oil prices fell by more than a dollar on Monday, 6 August, owing to expectations that energy demand could weaken because of economic troubles in the United States, analysts said.
New York’s main futures contract, light sweet crude for delivery in September, slumped by $1.41 to $73.96 a barrel.
The contract had soared to an historic high of $78.77 last Wednesday on news of sliding crude stockpiles in the United States, the world’s biggest consumer of energy.
In London on 6 August, the price of Brent North Sea crude for September delivery shed $1.10 to $73.65 per barrel.
“Oil prices have fallen back from record highs as weak non-farm payrolls and unemployment figures in the US on Friday once again undermined (economic) confidence, which has already been knocked by the subprime mortgage crisis,” Sucden analyst Michael Davies said.
“There are now many who are concerned that the (US) subprime mess could spread to other markets, and even hurt demand for oil.
“Oil prices are also being increasingly driven by funds and so there is also a worry that increased risk aversion could mean that the funds will close out positions in oil, leading to further weakness,” Davies added.
Oil prices rose by more than 20% during June and July on concerns over rising geopolitical tensions, falling US crude stocks, growing US demand for motor fuel and expectations that crude demand will rise strongly this year, according to analysts.
These expectations were prompted in part by the International Energy Agency, which has raised its 2007 oil demand forecasts.
The IEA has consistently called on OPEC to increase production but the oil cartel has said such a move would have no effect on prices.
The Organization of Petroleum Exporting Countries argues that the recent surge in oil prices is not linked to a lack of crude.
OPEC-member Kuwait said on Sunday that record prices were because of continued growth in the world economy and political instability in major oil producing regions.
Nawal Al-Fuzaia, Kuwait’s representative at OPEC, told state news agency KUNA that demand was increasing from China, India and the United States for “petrol products, particularly in the transport sector such as cars, aeroplanes.”
OPEC expects that global demand for oil will rise by up to 1.3 million barrels per day next year, Fuzaia said.