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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Snowshoe who wrote (54178)	10/13/2004 3:07:46 AM
From: elmatador	Respond to of 74559

Crude Oil Falls as IEA Says Record-High Prices Will Curb Demand 13-October-2004 Business News, Crude oil futures fell for a second day in New York after the International Energy Agency said record- high prices will curb demand in China and the rest of the world next year. The agency cut its forecast for consumption growth next year by almost a fifth, predicting that this year's 61 percent price rally will restrain economic expansion. China, the world's fastest-growing major economy, is turning to other fuels, such as natural gas, the adviser to 26 industrialized nations said. ``Sooner or later at these kind of price levels, it has to lower the spending power of consumers,'' said Dariusz Kowalczyk, senior investment strategist at CFC Securities Ltd. in Hong Kong. That would ``cause a downgrade of global growth and this will mean less demand for oil.'' Crude oil for November delivery fell as much as 37 cents, or 0.7 percent, to $52.14 a barrel in after-hours electronic trading on the New York Mercantile Exchange, and traded 19 cents, or 0.4 percent, lower at $52.32 at 12:08 p.m. Singapore time. Yesterday, oil fell $1.13, or 2.1 percent, to close at $52.51 a barrel. Earlier yesterday it rose as high as $54.45, the highest intraday price since futures began trading in 1983. Oil futures are up 63 percent from a year earlier. Trimmed Surge The declines trimmed a 25 percent surge since Sept. 8 on concern about lower U.S. output caused by Hurricane Ivan and concern that social unrest in Nigeria may cut output. Prices have also gained over the past year because of concern about disruptions to output from Russia, Iraq and Venezuela. Prices may have also fallen after investors sold contracts to profit from the rally, said Pieter Bruinstroop, who helps oversee $2.3 billion in resource company investments for APS Asset Management Ltd. in Singapore. ``There was selling across all commodities last night,'' Bruinstroop said. ``Given the recent profits generated, that is to be expected.'' Yesterday, the Paris-based International Energy Agency cut its forecast for consumption next year by 320,000 barrels a day, partly because of fuel-switching in China. Demand will rise 1.45 million barrels a day to 83.9 million in 2005, the agency said in its latest monthly report. ``Chinese power plants are switching to coal because oil has become so expensive,'' said Ong Eng Tong, the Far East consultant for Mabanaft Gmbh. Chinese refiners are also reducing imports of crude oil and processing less after international prices rose while the government kept its cap on domestic fuel prices. That cut the profit from turning crude oil into gasoline, diesel and kerosene, he said. Gains This Year To be sure, global consumption will jump 3.4 percent to 82.4 million barrels this year, the agency said, raising its forecast by 190,000 barrels a day from last month. The agency has boosted its demand projection for 2004 in all but one of its monthly reports since November 2003.