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Oil prices drop as OPEC trims back demand forecast

Oil prices slipped on Friday after OPEC lowered its demand forecast for this year and amid signs that US crude oil inventories are growing.

OPEC lowered its forecast on Friday for global oil demand growth this year by 110,000 barrels a day. OPEC, which cited lower consumption in the US and Asia, said its prediction comes after signs of larger oil inventories in the US, along with higher demand in January and last month.

Light sweet crude for April delivery dropped US$0.81 to settle at US$62.77 a barrel on the New York Mercantile Exchange. The price had jumped US$1.41 on Thursday to settle at US$63.58 a barrel on news over the US-led attack in Iraq and US concerns over Iran.

Brent crude for May fell US$0.95 to settle at US$63.26 a barrel on London's ICE Futures exchange.

Nymex gasoline futures fell US$0.0143 to finish at US$1.8601 per gallon (US$0.4914 per liter). Heating oil futures slipped US$0.0312 to US$1.7813 a gallon (3.8 liter). Natural gas futures fell US$0.214 to US$7.053 per 1,000 cubic feet (US$0.2491 per cubic meter).

OPEC set oil demand growth for this year at 1.46 million barrels a day and demand for the year at 84.5 million barrels a day. This brings its estimate in line with recent revisions by agencies such as the International Energy Agency and the Energy Information Administration.

A commodity strategist with the Commonwealth Bank of Australia in Sydney, David Thurtell, said that oil prices had gone up a "fair bit in recent days" on concerns about the conflict in Iraq and troubles in Nigeria.

"But stocks have been building nicely," he said, referring to the US Energy Department's weekly report that showed crude oil inventories rose by 4.8 million barrels last week to 339.9 million barrels, or 10 percent above year-ago levels.

Oil prices are about 12 percent higher than a year ago, reflecting worries about the stability of supplies from Iran, Nigeria and elsewhere.

In Nigeria, output has been disrupted by a wave of militant attacks over the last two months that has forced the country to cut its daily exports by 20 percent.

A militant group, demanding a great share of wealth from the oil pumped from its land, has threatened more attacks.
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