Oil steadies near $96 a barrel

Oil steadied near $93 a barrel yesterday after three sessions of losses, as violence in Nigeria and tensions involving Iran countered worries oil demand could be hit in a global economic downturn.

US light crude for February delivery was down six cents to $92.63 a barrel by 1110 GMT, off early highs of $93.26. London Brent crude rose 12 cents to $91.19 a barrel.

Oil, which hit a record high of $100.09 on Jan 3, has fallen for the past three straight sessions on growing fears of a possible US economic recession which could curb demand in the world's biggest oil consumer.

"Geopolitical tensions between Iran and the United States as well as violence in Nigeria have rekindled worries of a potential supply disruption," said Gerard Burg, a resource analyst at National Bank of Australia in Melbourne.

"That will put upward pressure on prices," he said.

US President George W. Bush accused Iran on Sunday of threatening global security by backing militants and urged his Gulf Arab allies to confront the issue.

The war of words between Washington and Teheran has rekindled worries that Iran, the world's fourth-largest crude exporter, could cut oil exports to retaliate against US pressure on its nuclear plans.

In Nigeria, militants fighting for regional control of the country's oil-producing south detonated a remote-controlled bomb on an oil tanker on Friday, causing a big fire.

It was the second rebel attack on Africa's largest oil industry in a week. Militant raids since 2006 have knocked out a fifth of the country's oil output capacity.

Analysts said that the oil market was caught between opposing forces of a short-term tight supply and downside risks to oil demand from a slowing economy, with geopolitical events and speculators driving prices in the near-term.

"The market is still finding its view on what's going to happen over the course of the year," noted Simon Wardell, analyst at Global Insight.

The run-up to the OPEC meeting on Feb 1 is expected to be closely watched for direction, analysts said.

OPEC said on Sunday a slowing global economy would not impact oil demand in the short term and lead to a price collapse.

In a newspaper interview, OPEC Secretary-General Abdullah al-Badri also said that oil prices had been driven to record highs by speculators rather than by any supply shortage, and the producer group was ready to boost output if needed.

Meanwhile, crude speculators on the New York Mercantile Exchange boosted net long positions to a two-month high in the week to Jan 8 as oil prices struck a record $100 a barrel.

Agencies

(China Daily 01/15/2008 page17)