Oil prices rise despite low demand concerns
September 7, 2009
Oil prices rose on Monday but further gains may be capped by worries about low energy demand in the US, the world's biggest energy consuming nation, traders said.
New York's main contract, light sweet crude for October delivery, rose 32 cents to $68.34 a barrel.
Brent North Sea crude for October climbed 45 cents to $67.27.
The latest US jobs data released Friday, which showed a jump in the unemployment rate, was a reminder that energy demand would likely remain weak in the US.
"It's a reality that we will see the unemployment rate continue to rise and the demand outlook may have been pared back a bit," said National Australia Bank analyst Benjamin Westmore.
The US unemployment rate climbed to 9.7 percent with 216 000 jobs lost in August from 9.4 percent and a revised 276 000 jobs lost in July.
Most analysts had expected 230 000 job losses and an unemployment rate of 9.5 percent in August.
The US, in recession since December 2007, is seen as key to lifting global oil demand, which has been hit by the worldwide economic slump.
Meanwhile, analysts expect the Organization of the Petroleum Exporting Countries (OPEC) to stick to its production quotas when oil ministers from the cartel meet on Wednesday in Vienna.
OPEC, whose 12 members pump 40 percent of the world's oil, agreed in 2008 to remove 4.2 million barrels of daily output from the market as it sought to prop up crumbling prices but some countries are believed to have been producing above quota.
Analyst Frederic Lasserre at French bank Societe Generale said there was little pressure for change, with current prices acceptable to most producers and consumers given uncertainty about when demand will pick up again.
"At 70 dollars there is no pressure to lower production. Everyone is earning well. There is no pressure to lift production either," Lasserre said.
"Demand has not really recovered," including in the key energy-hungry Chinese market, he added.
On the supply side, Norwegian energy group StatoilHydro and Sweden's Lundin made new discoveries of oil and gas off the coast of Norway, the Petroleum Directorate said on Monday.
The Norwegian giant estimates the find amounts to between 13 and 31 million barrels of oil and between one and two billion cubic metres of natural gas. - AFP
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