Oil prices fell nearly 4 percent on Friday after the International Energy Agency said big consuming countries were more comfortably supplied than it previously thought.
US light crude tumbled US$1.18 to US$30.33 a barrel, extending Thursday's sharp losses and pulling prices back from recent 12-week highs above US$32. London August Brent crude fell US$0.87 to US$26.35 a barrel.
PHOTO: AFP
Prices fell as the Paris-based IEA, energy adviser to 26 industrialized nations, said its previous estimate of oil stock levels was 79 million barrels too low.
The agency's revised estimate put oil stocks in the industrialized world for the end of April at 2.439 billion barrels,
"Stocks are still below normal and can absorb some surplus in the third quarter, but I think we have entered a stage when more supply is coming on the market and will impact prices," said Geoff Pyne, oil market consultant to Sempra Energy Trading.
The IEA said the revision did not change its view that global markets were tight. Stocks are still 157 million barrels, or 6.5 percent, below last year.
"The market is obviously better supplied than we thought as little as two weeks ago, but stocks are still low and fundamentals are still tight, so we need to build more stocks," said Klaus Rehaag, editor of the IEA monthly oil market report.
"The increase in crude stocks may, however, signal some relief for an otherwise tighter heating oil situation later this year," he added
Oil stocks have been drawn down this year by a harsh northern winter and supply disruptions from a strike in Venezuela, ethnic strife in Nigeria and the war in Iraq.
Iraq on Thursday sold its first oil since the US-led invasion nearly three months ago, but looting and sabotage at oil facilities are expected to keep Iraq's exports well below prewar levels for several months.
The delays in Iraq's postwar export resumption enabled the OPEC producer cartel to postpone fresh supply cuts at Wednesday's meeting in Qatar.
OPEC, which controls about half the world's oil exports, decided to meet again in just seven weeks, on July 31, in case the return of Iraqi shipments undermines high prices.
OPEC sets a US$22 to US$28 target range for its basket of seven grades of crude oil. The basket was last valued at US$27.48.
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