Oil slightly lower in Asia after near-record surge

Tue, Apr 8 2008, 03:42 GMT
http://www.afxnews.com

SINGAPORE (Thomson Financial) - World oil prices were slightly lower in Asian trading on Tuesday after comments by the OPEC cartel and an inflow of investor money helped prices surge to near-record levels.

In morning trade, New York's main oil contract, light sweet crude for delivery in May, dropped 23 cents to $108.86 per barrel.

The benchmark contract closed $2.86 higher at $109.09 on Monday in New York after touching an intraday high of $109.48.

Brent North Sea crude for May fell 16 cents to $106.98 a barrel, after settling at $107.14 on Monday in London.

New York crude hit a record intraday high of $111.80 on March 17 on the back of a weak U.S. dollar and choppy world financial markets.

London Brent scored a historic peak of $108.02 earlier in March.

Investors "buying into commodities" are pushing up prices, said David Johnson, an oil analyst at Macquarie Research in Hong Kong.

The market was mostly driven by sentiment, and investors were now "nervous about shortages to some extent," said Johnson.

Over the weekend, the secretary general of the Organisation of the Petroleum Exporting Countries (OPEC), Abdullah al-Badri, rejected calls for an increase in the cartel's crude output, saying that non-fundamental factors were to blame for current high prices.

"At the moment there is enough oil in the market and no need to change OPEC's output," Badri said in Tehran late Saturday.

Eric Wittenauer at Wachovia Securities said energy prices had fresh momentum, which has brought speculative cash back into the market.

The OPEC cartel, which produces 40 percent of global oil supplies, maintained its output at 29.67 million barrels per day at its last meeting in March.