Oil prices drop before US energy report

AFP, Thursday 13 Oct 2011

Fall comes hours before energy body updates traders with latest indications of energy demand in world's largest oil consumer

World oil prices fell back on Thursday as nervous traders withdrew from the market ahead of a weekly US stockpile report after the IEA and OPEC cut their global demand outlooks, analysts said.

In early afternoon deals, Brent North Sea crude for delivery in November shed US$1.15 to $110.21 a barrel.

New York's main contract, light sweet crude for November, lost $1.37 to $84.20 per barrel.

Later on Thursday, the US government's Energy Information Administration (EIA) will update traders with the latest indicator of energy demand in the world's largest oil consuming nation.

"It may be due to some profit-taking before the weekly inventories report from EIA is released," said Ker Chung Yang, commodity analyst for Phillip Futures, in reference to falling crude oil prices.

Market expectations are for 200,000-barrel drop in crude reserves for the week ending 7 October, according to a survey by Dow Jones Newswires. That would indicate strengthening oil demand.

"The main focus will switch to the weekly EIA oil inventories report that is expected to show small build in crude oil stocks and declines in gasoline and distillate inventories," added Sucden analyst Myrto Sokou.

The key report comes after both the International Energy Agency (IEA) and Organization of Petroleum Exporting Countries (OPEC) both downgraded their global demand forecasts earlier in the week.

The IEA on Wednesday again cut its 2012 oil estimates owing to a cloudy economic outlook, predicting demand at 90.5 million barrels a day next year, down 210,000 barrels from the previous estimate.

On Tuesday, OPEC also cut its world forecast for 2011 and 2012, citing uncertainty in the global economy and weaker demand from developing giants China and India.

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