LONDON, Jan 11, 2007 (AFP) – World oil prices sank below 53 dollars per barrel on Thursday to mid-2005 low points on healthy US energy stockpiles and warm weather in the northern hemisphere. The latest sharp falls have sparked speculation that the Organisation of Petroleum Exporting Countries could soon hold an emergency production meeting.
London’s Brent North Sea crude for February delivery sank to 52.60 dollars per barrel in electronic trading — a low last seen on June 13, 2005.
The contract then pulled back to 53.60 dollars, down nine cents from Wednesday.
New York’s main oil futures contract, light sweet crude for delivery in February, tumbled to 52.94 dollars per barrel in Thursday’s early electronic deals — marking the lowest point since June 9, 2005.
Later, it stood at 53.65 dollars per barrel, down 37 cents from Wednesday.
Oil prices have now shed 14 percent in value since the start of 2007.
Analysts say that milder-than-normal winter temperatures, which have reduced heating fuel demand in both the United States and Europe, have pushed prices downwards.
Added to the picture, the US Department of Energy had said on Wednesday that stockpiles of distillates and gasoline (petrol) rose sharply last week, offsetting a bigger-than-expected drop in crude oil inventories.
“The data was relatively bearish with some pretty big builds in products — gasoline and distillates — and we’ve got ongoing very mild weather,” said Barclays Capital analyst Kevin Norrish.
“Overall we do not think the downwards move is justified, but with the very mild weather not just in the United States but right through the northern hemisphere, there is the potential for further price losses.
“The big number is 50 (dollars) now, and given the momentum the market cannot rule out a test at that level.”
The DoE had said that US crude oil reserves dropped five million barrels to 314.7 million in the week ended January 5. Most oil traders were expecting crude inventories to have dropped by just 1.5 million barrels.
Inventories of distillate products, such as heating oil and diesel fuel, increased 5.4 million barrels to 141 million over the week, much more than the predicted rise of 2.0 million barrels.
Norrish added: “The lower the price goes, the more likely it is that OPEC is going to do something, and that may range from ensuring very tight compliance with the production cuts that have already been made, to actually making fresh cuts.”
The powerful 11-nation OPEC oil cartel had decided at a meeting last month in the Nigerian capital Abuja to cut output by 500,000 barrels per day (bpd) from February 2007. This followed OPEC’s reduction of 1.2 million bpd that became effective in November.