BLBG: Crude Oil Falls a Third Day as Demand Fails to Justify Gains
By Ann Koh
Oct. 26 (Bloomberg) -- Crude oil fell for a third day in New York after four weeks of gains pushed prices above levels justified by a recovery in demand.
Oil dropped below $80 a barrel after Nigerian rebels ordered a ceasefire and talks to end a conflict that has cut output from Africa’s biggest oil producer.
“Around $80 a barrel is a price normally associated with quite tight markets, and I don’t regard the oil market as tight at the moment,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “Maybe people are just becoming a bit more cautious about the oil price at such high levels.”
Crude for December delivery fell as much as 93 cents, or 1.2 percent, to $79.57 a barrel on the New York Mercantile Exchange, and was at $79.75 at 11:40 a.m. Singapore time. Futures are up 79 percent this year and touched a one-year high of $82 a barrel on Oct. 21. Prices gained 22 percent in the four weeks to Oct. 23.
“Nigeria would certainly be a factor in bringing the price down,” said Nick Raffan, an analyst at Fat Prophets in Sydney in an interview with Bloomberg Television.
The Nigerian cease fire, which went into effect at midnight, followed an Oct. 19 meeting between President Umaru Yar’Adua and Henry Okah, leader of the Movement for the Emancipation of the Niger Delta. Okah later conveyed the government’s readiness to talk with the group’s negotiators, MEND spokesman Jomo Gbomo said yesterday in an e-mailed statement.
The militant group, which surfaced in January 2006 and orchestrated attacks blamed for reducing Nigeria’s oil output by more than 20 percent a year, called off a three-month cease fire on Oct. 16.
China’s Demand
China’s crude oil imports rose 15 percent to 17.2 million metric tons in September from a year earlier, data from the customs office showed today.
“China is recovering quite strongly at the moment and is a very big oil importer,” Raffan said.
The Asian nation’s imports may reach 6 million barrels a day by 2012, he said.
The global supply of light, low-sulfur or sweet, grades of crude oil may not be enough to meet demand in five years when the global economic recovery leads to an increase in diesel demand, Sonia Ka Song, the Asia-Pacific head of oil and gas at HSBC Holdings Plc in Hong Kong, said in a Bloomberg Television interview.
Brent crude oil for December settlement fell as much as 75 cents, or 1 percent, to $78.17 a barrel on the ICE Futures Europe exchange in London and was at $78.37 at 10:46 a.m. Singapore time.
-- With assistance from Bernie Lo and Karolina Miziolek in Hong Kong. Editors: Jane Lee.
