Oil prices pulled back on Friday after OPEC questioned whether crude can remain so high and the US dollar gained against the euro.
On the New York Mercantile Exchange, benchmark light, sweet crude for July delivery fell US$1.88 to settle at US$134.86 while, in London, July Brent crude lost US$1.84 to settle at US$134.25 on the ICE Futures exchange.
Friday’s close puts the price of the NYMEX contract more than US$4 below the all-time trading high it struck last Friday, but still more than 10 percent higher than it was before its latest surge, which began just over a week ago. The price for a barrel has swung back and forth in a band about US$10 wide since then.
In its monthly market report, OPEC said oil’s recent volatility “reconfirms the view that current price levels do not reflect supply and demand realities.”
The cartel also lowered its global demand forecast for this year, saying it now expected demand to increase by 1.28 percent to an average of 86.9 million barrels per day, down from a previous forecast of 1.35 percent.
“A review of prospects for the remainder of the year also shows little support for prices to remain at current levels,” OPEC said.
That downward revision follows similar moves by the US Energy Department and the International Energy Agency earlier in the week.
Phil Flynn, an analyst at Alaron Trading Corp in Chicago, said the revised forecasts suggest global demand for oil is slowing. That trend could accelerate, he added, if prices don’t come down soon.
“It’s a sign that maybe the bull run could come to an end. You don’t want to say that for sure, but you’re starting to see some shifts,” Flynn said.
Oil prices were also pressured by speculation that Saudi Arabia may boost production following a report in the Middle East Economic Survey, an industry publication.
Crude prices have fluctuated widely since they surged nearly US$11 in a single session to a trading record above US$139 a week ago. Some investors believe prices could yet push higher, while others think prices are due to fall, perhaps sharply.
Analysts call oil’s current wavering “range-trading,” as traders await direction from a significant move in the dollar or change in supply-and-demand fundamentals.
“There is no driver out there to cause prices to break out of this range yet,” said Victor Shum, an energy analyst with Purvin Gertz in Singapore.
A stronger US dollar also helped keep oil prices in check on Friday.
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