July 29, 2006	Saturday	Rajab 2, 1427

LONDON, July 28: World oil prices fell heavily on Friday following evidence of slower economic growth in the United States, the world’s biggest consumer of energy, which prompted fears over demand, analysts said.

New York’s main contract, light sweet crude for delivery in September, plunged $1.34 to $73.20 per barrel in pit trading.

In London, Brent North Sea crude for September delivery sank $1.40 to $73.61 per barrel in electronic deals.

US economic growth slowed to just 2.5pc in the three months to June, data showed on Friday, as consumers turned nervous in the face of sky-high fuel prices and a cooling property market.

The weak data “reflects a depressed consumption, which is usually contributing to lower prices because it could lead to a fall in the US demand for gas,” said AG Edwards analyst Bill O'Grady.

The Commerce Department said that gross domestic product (GDP) growth in the second quarter decelerated sharply from the blistering pace of 5.6pc recorded over January-March.

The figure was also much worse than Wall Street's second-quarter forecast of 3.0 percent.

“I think the GDP data contributed to the oil price falls,” said Man Financial analyst Andy

Lebow.

“The market was soft before that but the GDP data accelerated the sell off.”

However, losses were limited somewhat by supply concerns in Nigeria as well as tensions in the Middle East.

Prices are winning some support from “a combination of Nigeria’s disruptions and the latest US inventory report which had quite a large drop in gasoline stocks and not much movement on the crude front,” Global Insight analyst Simon Wardell said.

“And the market is reacting to the situation in the Middle East.” The market was still feeling the ramifications after Royal Dutch Shell declared ‘force majeure’ on crude deliveries from Nigeria’s Bonny oilfield for July and August. The move means contracts might not be honoured during those two months.

The Anglo-Dutch giant declared force majeure after a leak in an oil pipeline in southern Nigeria cut output by 180,000 barrels per day.

Disruptions blamed on unrest in the Niger Delta brought Nigeria's total production loss to 675,000 barrels per day, or 26pc of the country’s normal daily output, according to an industry source.

Tobin Gorey, commodities strategist at the Commonwealth Bank of Australia in Sydney, added that tensions over Iran were also “a big part” of why oil prices have remained above $70.—AFP