Oil falls on Saudi statements assuring increases in supply
SYDNEY: Oil fell $1 toward $100 a barrel on Monday, as funds sought to lock in more first-quarter profits and the top exporter, Saudi Arabia, reassured consumers of its plans to increase supply in the coming years.
U.S. light crude for May delivery slid $1.01 to $100.83 a barrel in Globex electronic trading in Europe, after hitting an intraday low of $100.02
Prices fell almost $9, about 8 percent, last week as investors fled commodities.
London Brent crude dropped 83 cents to $99.55.
“I think theres still a lot of profit-taking in the market, and that is pushing down oil prices,” said Tetsu Emori, a Tokyo-based fund manager at Astmax. “The U.S. dollar is also bouncing back from major currencies, so thats adding to the downward pressure.”
Saudi Arabia said Sunday that it was working to expand its oil production and refinery capacity in order to maintain world economic growth, reaffirming its vow to invest tens of billions of dollars in new wells and infrastructure.
“The kingdom will work with OPEC countries, other producers and consuming countries toward oil market stability and to avoid the effects of harmful speculation,” the Supreme Council of Petroleum and Mineral Affairs said in a statement after a visit by Vice President Dick Cheney.
On Monday, Cheney, who had met King Abdullah of Saudi Arabia, said the kingdom had kept its promise to increase oil production capacity over the past three years.
Washington has said that it wants Saudi Arabia to help raise production by the Organization of Petroleum Exporting Countries to ease prices, but OPEC has resisted pumping more crude because of fears of weakening demand.
A tumbling dollar and geopolitics in the Middle East have helped fuel the recent oil rally.
Other commodities have also hit record highs recently as investors fled stock markets and took refuge in dollar-denominated assets.
But oil has fallen sharply from its record of $111.80 on March 17, as investors, worried about the outlook of the global economy, cash in on recent records.
Chakib Khelil, president of OPEC, said on Saturday that oil prices would range between $80 and $110 a barrel for the rest of 2008.
