LONDON, Nov 13: World oil prices dived for the second day running on Tuesday as the International Energy Agency lowered its global demand forecast for crude, analysts said.

The revision came as oil kingpin Saudi Arabia hit out at the theory that oil prices had surged to record heights close to $100 a barrel last week owing to tight supplies.

New York’s main contract, light sweet crude for December delivery, slumped $2.36 to $92.26 per barrel. Last Wednesday it had hit an historic peak of $98.62.

In London on Tuesday, Brent North Sea crude for December delivery shed $1.35 to $90.63 per barrel. At one point it fell under $90 for the first time since November 1.

Emphasising the volatility of oil prices in recent weeks, Brent crude struck an all-time high of $95.19 last Wednesday.

“Oil prices were lower today (Teusday)... falling under pressure from more bearish comments,” Sucden analyst Michael Davies said.

“This time it was the IEA who said that crude prices near $100 per barrel were already slowing consumption.” The current surge in world oil prices could be losing momentum as demand declines and output from the Opec producers’ cartel picks up, the International Energy Agency predicted on Tuesday.

The IEA, which monitors energy policies in developed countries, lowered its global oil demand forecast for fourth quarter 2007, citing weaker economic activity in the United States, and pointed to an increase of 410,000 barrels a day in Opec output in October.

“There are ... strong indications that high prices are depressing demand,” the agency said in its monthly oil report, “which together with signs of higher output from Saudi Arabia, Iraq and Nigeria, have capped further price gains.” But the IEA cautioned that despite its downward fourth quarter demand revision, “Supplies are likely to remain constrained through to the end of the year.” This strongly contrasted with comments by the oil minister of Opec kingpin Saudi Arabia, who on Tuesday said that fears about a shortage of crude supplies were “groundless” and there was no reason for them to push prices to current record levels.

“The prices today (Tuesday) have really no relation with the fundamentals,” Ali al-Nuaimi told reporters in Riyadh ahead of an Opec summit opening in the Saudi capital on Saturday.

“I believe Opec in general and Saudi Arabia in particular have demonstrated their ability to respond very quickly to any disruption,” Nuaimi added.

“So I don’t foresee the tightness (in the market) that pessimists are talking about.” Nuaimi said the pessimism displayed by industry “gurus” and “experts” is damaging and “results in fluctuations of prices on the market.” He said Saudi Arabia was currently producing nine million barrels of oil per day but has an output capacity of 11.3 million bpd.

Nuaimi said the kingdom, the world’s top oil producer, would within three months further expand its production capacity by around 500,000 bpd and raise it to 12.5 million bpd by 2009.—AFP