NEW YORK, Aug 10: Oil prices edged higher on Friday, helped by an International Energy Agency forecast for improved oil demand and by news a major US refiner will to keep running refineries at less than full capacity.
September crude futures on the New York Mercantile Exchange (NYMEX) settled 19 cents higher at $26.84 a barrel, only a 2-cent rise for the week.
Brent crude futures for September delivery settled 23 cents higher at $25.31 a barrel.
The International Energy Agency (IEA) said it expected demand to jump sharply in the fourth quarter this year and continue through 2003, even though it has been sluggish so far this year.
However slow the recovery in oil demand may appear, it is still on track, the IEA said in its monthly Oil Market Report.
The impact of the equity market slide on oil demand was unclear and may be marginal, the agency said, although it did increase the downside risk to demand forecasts.
The Paris-based agency, an arm of the Organization for Economic Cooperation and Development (OECD), has consistently cut its 2002 demand growth estimate over the past six months as economic recovery has failed to keep pace with expectations.
This time it trimmed the annual growth figure by 50,000 barrels per day (bpd) to 200,000 bpd, the weakest for 15 years.
Lawrence Eagles of GNI Research said barring any major news, the Brent futures market was likely to keep trading in a range of $24.80 to $25.20.
Whenever the price fell below $24.80 recently the funds buy and then we witness a bounce. But we don’t really see anybody leaning heavily in either direction right now, he said.
Opec ministers are due to meet in Osaka, Japan, on Sept. 19 to decide on output and market-share policy for the fourth quarter, and cartel insiders expect it to relax current curbs, although there is no sign of Opec reducing its price target.
Oil traders are watching closely to see if Opec can improve compliance to individual quotas by cartel members in a market bracing for possible supply uncertainty if the US uses its military to back President George W. Bush’s expressed desire to overthrow Iraqi President Saddam Hussein.
Opec countries bound by production restrictions raised output by 360,000 barrels per day (bpd) in July, pumping 1.5 million bpd above the official cartel ceiling, the IEA said.
That would mean that cheating above quotas has eliminated the 1.5 million bpd reduction Opec is supposed to be operating under since Jan. 1. Opec has an official production target of 21.7 million bpd.—Reuters