Oil Prices Dip on IEA Official’s Comments

By GILLIAN WONG

SINGAPORE – Crude oil futures drifted lower Tuesday as an International Energy Agency official said high pump prices have hurt fuel demand.

Light, sweet crude for December delivery fell 6 cents to $57.63 a barrel in Asian electronic trading on the New York Mercantile Exchange. The contract Monday rose 16 cents to settle at $57.69.

In London, December Brent crude fell 8 cents to $54.65 a barrel on the ICE Futures exchange.

High oil prices have started dampening global demand and the slowdown in consumption growth could in turn push prices lower, Noe Van Hulst, the International Energy Agency’s Director of Long-Term Cooperation and Policy Analysis, said Monday.

The agency last week revised down its 2005 demand world demand growth forecast by 70,000 barrels a day, to 1.2 million barrels, and 2006 demand growth estimate by 90,000 barrels a day, to 1.66 million barrels a day.

Meanwhile, traders on Tuesday watched weather patterns in the United States and waited for a midweek U.S. petroleum supply report for clearer signals on the direction of prices.

“The market is quiet today; very, very quiet,” said chief commodities strategist Tetsu Emori with Mitsui Bussan Futures in Tokyo. “Traders are waiting for direction from the weather and to see the U.S. inventory data later this week.”

U.S. commercial crude inventories were expected to rise 1.3 million barrels in this week’s government petroleum-inventory data, according to the average estimates of 10 energy analysts surveyed Monday by Dow Jones Newswires.

A rise in refinery utilization was expected to boost distillate stocks, which include heating oil and diesel fuel, by 300,000 barrels, while gasoline stocks were expected to rise 1.35 million barrels, according to the survey.

Oil prices fell to a four-month low closing price of $57.53 Friday, prompted by last week’s U.S. inventory data which showed a large increase in crude and gasoline stocks, overshadowing a seventh straight decline in distillate fuel stocks.

But analysts warned prices could spike without warning as the market was still nervous about ability of hurricane-battered refineries in the Gulf of Mexico to restart operations and gear up for the Northern Hemisphere winter, when heating oil demand peaks.

“Traders might make an abrupt turn around this week though when we get our first taste of winter temperatures,” said Phil Flynn of Alaron Trading Corp. in a research note. “Will the market get antsy now?”

Crude futures had risen Monday on predictions a cold snap was headed for the northeastern United States, the world’s biggest heating oil market.

Forecaster AccuWeather.com predicted a “dramatic change” in the weather pattern this week, with a cold jet stream, coming from Canada, hitting the eastern U.S. by midweek and staying through the weekend.

Nymex December heating oil fell marginally to $1.7300 a gallon while gasoline gained a tad to $1.4970 a gallon.

Natural gas rose slightly to $11.630 per 1,000 cubic feet.