LONDON, Feb 14: World oil prices fell on Monday as warmer weather in the US north east region offset reports that Opec was considering cutting output in the second quarter even amid strong demand, traders said.
New York's main contract, light sweet crude for delivery in March, dropped 38 cents to $46.78 a barrel in early deals. In London, the price of Brent North Sea crude oil for delivery in April, lost 39 cents to $44.89 a barrel. The March contract had expired on Friday at $44.80.
"There is very little to prop up prices with heating oil prices having faltered with the milder weather the Americans are experiencing" in the north east, Bache Financial trader Christopher Bellew said.
Trading volumes were meanwhile thin in London with many dealers attending the International Petroleum Exchange's annual forum in the British capital. "There is very little trading going on because of IPE week," GNI-Man Financial trader Kevin Blemkin said.
Prices had earlier risen slightly as markets studied comments by Opec secretary general Adnan Shihab-Eldin, who had been reported as saying that the cartel might need to cut supply for the second quarter even if global oil consumption remains robust.
He reportedly added that the Organization of Petroleum Exporting Countries might need a faster, bigger cut if demand fell sharply in the second quarter, after the end of the northern hemisphere winter.
"The Opec comments are aggressive," Informa Global Markets analyst Peter Luxton said. "There is a reluctance for the group to see prices falling too quickly." A report from the International Energy Agency (IEA) predicting a strong rise in world's energy demand growth in 2005 had pushed prices up late last week.
Oil prices had soared by more than a dollar last Thursday after the IEA raised its estimate for demand growth this year by 80,000 barrels per day to 1.52 million barrels.
Meanwhile the week's "main focus" for markets was expected to be the latest snapshot of US commercial crude oil inventory data, according to Graham Sharp, director of energy trading at the Trafigura brokerage firm.
Elsewhere, oil and gas pipelines in large energy producer Iraq have continued to suffer attacks. The country's northern city of Kirkuk lay under a thick pall of smoke on Monday after insurgent strikes on energy infrastructure. -AFP
