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Oil drops to 3-week low on economic concerns

OIL prices slid below US$91 a barrel yesterday to the lowest level in more than three weeks.

This came ahead of a slate of oil industry data that could show more signs of possible weakening demand and as the Organisation of Petroleum Exporting Countries repeated its pledge to lift output if needed.

US light crude for February delivery fell to a low of US$90.60 and was down US$1.15 at US$90.75 by 1138 GMT (7.38pm Singapore time). It had tumbled by US$2.30 on Tuesday, on a surprise fall in United States retail sales last month and a record quarterly loss at the largest US bank Citigroup.

London Brent crude for February, which was due to expire yesterday, was down 78 US cents at US$90.20 a barrel, after falling to a low of US$89.75 earlier.

Industry analysts expect US crude inventories to have risen last week for the first time in nine weeks, calling for a 600,000 barrel rise as imports recovered.

Meanwhile, the International Energy Agency (IEA) said yesterday that world oil demand growth this year will be lower than expected and could fall further if an economic slowdown in the US, the top consumer, accelerates.

The adviser to 27 industrialised countries, in its monthly Oil Market Report, cut its world oil demand growth forecast to 1.98 million barrels per day (bpd), down 130,000 bpd from its forecast last month.

The IEA, however, said total oil stocks in Organisation for Economic Cooperation and Development economies had slipped below their five-year average, a sign of a tightening oil market.

US oil prices are down by more than 9 per cent from their all-time peak of US$100.09 earlier this month, as concerns about a US economic slowdown has outweighed tightening stockpile levels in major consumer nations.

 

Source: REUTERS (The Straits Times 17 Jan 08)

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