December 05, 2006	Tuesday	Ziqa'ad 13, 1427

LONDON, Dec 4: World oil prices sank on Monday on forecasts of above-average temperatures in the key energy consumer the United States, dealers said.Profit-taking also forced prices lower after crude oil had earlier struck the highest points for more than two months on supply concerns, they added.

New York’s main contract, light sweet crude for delivery in January, sank 98 cents to $62.45 per barrel in pit trading. Overnight it struck $63.82 -- the highest point since September 28.

In London, Brent North Sea crude for January delivery tumbled $1.05 to $63.57 in electronic deals. It had rebounded $5 last week to reach $64.83 -- a level last seen on September 19.

Prices also fell as the dollar recovered from 20-month lows against the euro and 14-year lows against the pound. A stronger dollar makes dollar-denominated oil more expensive for holders of other currencies.

Losses were capped, however, by expectations that the Organisation of Petroleum Exporting Countries may decide later this month to further cut crude output.

“The petroleum markets were modestly lower over the weekend, with a bounce in the dollar and a warm temperature forecast combining to undercut values for now,” said Citigroup analyst Tim Evans.

The National Weather Service said earlier that temperatures in the northern US will have higher than average temperatures from December 9-13, while temperatures in the south of the country are expected to be average.

The news reassured traders that the current cold snap in the US would probably not last.

Oil prices had risen sharply last week owing to North American winter weather, falling US energy stocks and predictions that Opec would cut output at its next meeting in Abuja on December 14.

Regarding the weakening US currency, Sucden analyst Michael Davies added:

“There are concerns that Opec members’ profits will be impacted by the falling dollar, in which oil is priced, and increase the likelihood that Opec will cut output further.”

Opec president and Nigerian Oil Minister Edmund Daukoru said on Monday there was an oversupply of oil of some one million barrels daily on world markets, the official Emirati WAM news agency reported.

Daukoru, speaking on the sidelines of a gas conference in Abu Dhabi, “estimated the current oversupply on the oil market at about one million barrels (per day),” it said.—AFP