Oil falls below $85 on Opec hike, economic woes

Oil falls below $85 on Opec hike, economic woes

Singapore: Oil retreated below $85 a barrel on 24 October, falling for the fourth consecutive session on forecasts that US crude stocks likely rose again and on signs that Opec was already boosting oil supply.

US light crude for December delivery fell 55 cents to $84.72 a barrel at 0342 GMT, around $1 lower than around the same time a day earlier. Oil has fallen more than $5.00 since hitting a record high of $90.07 last week.

London Brent crude fell 27 cents to $82.58 a barrel.

“Overall the market still looks strong but it may have got ahead of itself a little last week," said Tony Nunan, risk manager for Mitsubishi Corp in Tokyo.

“It all depends on US inventories now. In the fourth quarter, we could go up to $105 a barrel or down to $70. All seems possible," he added.

A Reuters poll of 12 analysts predicted that US crude and gasoline stocks each rose by 800,000 barrels last week.

Distillate stocks were probably little changed, the poll showed, after rising by 1 million barrels in the week ended 12 October, easing concerns of a shortfall in the United States ahead of winter that had fuelled oil’s rally in recent months.

Opec may have also relaxed its adherence to curbs in response to a jump in prices, having raised October oil supply by 500,000 barrels per day (bpd), in advance of its deal to increase output by that amount from next month.

Oil would already have surpassed $120 a barrel if Opec did not exist to moderate the price with its spare capacity cushion, a top Nigerian official said on Tuesday.

Former US Federal Reserve Chairman Alan Greenspan said on Tuesday the US economy would likely not slip into recession even though it still faces pressure from a drawn-out housing-market slowdown.

However, the confidence of American consumers fell to a six-week low in the latest week as higher gasoline prices and credit concerns continue to erode the economic outlook, a poll showed, raising concerns that oil demand would be hit.

Worries that a US housing slump could drag the economy into recession have weighed on oil prices. But oil has gained about 40% this year on fears of a supply shortfall in the northern hemisphere’s winter season and on tensions in the Middle East.

But in a sign that tensions between Iraq and Turkey could be contained, Iraq promised Turkey it would close the offices of Kurdish rebels and work to prevent them launching attacks on Turkey.