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Oil price volatility in focus at world energy forum
by Staff Writers
Kuwait City (AFP) March 12, 2012

The world's largest energy forum began meetings on Monday over oil price fluctuations and safeguarding supplies amid heightened tensions over Iran's nuclear programme and a softening in global growth.

Oil ministers and delegates from the 88-member International Energy Forum (IEF) are holding their biennial three-day gathering in the Gulf emirate of Kuwait to discuss the role of the forum in tackling market volatility.

Ministers will discuss "energy market fluctuations and the role of the International Energy Forum and its member states in dealing with them," according to a statement by the organisers.

They will also discuss behind closed doors "the long-term demand for energy, safeguarding supplies and drawing of appropriate policies for ensuring energy supplies," it said.

The Energy Minister of the United Arab Emirates, Mohammad bin Dhaen al-Hamli, acknowledged that oil prices were high and blamed it on uncertainties in the Middle East.

"The prices are on the high side, but really prices are reacting to what is happening in the Middle East," he told reporters on the first day of the forum.

Angola's oil minister also blamed geopolitical concerns for the surge in oil prices, but he said he did not expect crude prices to rocket to the 2008 levels of around $150 per barrel.

"Oil prices are rising because of geopolitics... but are unlikely to rise to the levels seen in 2008," said Jose Maria Botelho de Vasconcelos on the sideline of the forum, according to Dow Jones newswire.

"I think $110-115 is a good price range," he added.

Kuwaiti Oil Minister Hani Hussein said the meeting is being held under "extraordinary circumstances," citing Iran's recent threats to block the Strait of Hormuz -- through which most of Gulf oil shipments are exported, and the eurozone crisis, as causes of concerns.

"The threats regarding the Strait of Hormuz, as well as the eurozone crisis, speculators and price increases are making the situation more complex," he said in a television interview on Sunday, according to KUNA state news agency.

Iranian officials had in January warned they could close the strait if increased Western sanctions over Tehran's controversial nuclear programme halt Iranian oil exports, triggering further US security measures in the strategic transit route.

But a top Kuwaiti official said Monday that the oil-rich emirate did not receive any requests from its customers to increase production due to a looming cut in Iranian oil exports.

"We do not expect any special request to increase production," Farouk al-Zanki, the chief executive officer of state-owned Kuwait Petroleum Corporation, told reports at the forum.

He said the Gulf state was pumping around three million barrels per day and was working on building its spare capacity.

"If there is spare capacity and there is demand for it, you will hear about it," he added.

Energy-hungry Japan and South Korea earlier this year held energy talks with Gulf states aimed to secure alternative oil resources in case Iran sanctions hit their imports.

On Tuesday EU foreign affairs chief Catherine Ashton said on behalf of Britain, China, France, Russia, the United States and Germany that they were ready to hold talks with Iran.

Last week, the OPEC oil cartel trimmed its 2012 global oil demand growth forecast for the second time in two months because of worries about developed countries' economies and higher crude prices.

The Organisation of Petroleum Exporting Countries (OPEC) blamed a weak growth in the OECD economies, mainly the situation in Europe, in addition to high oil prices, for the expected ease in demand.

It also pointed to tensions between Iran and the West and speculation about Israeli military action against Tehran.

The 12-member cartel, which accounts for about 30 percent of global crude oil output, now expects daily demand this year of 88.63 million barrels per day, down from its forecast a month ago of 88.76 million bpd, it said in its March monthly report.

This still represents growth compared to 2011, when demand was 87.77 million bpd, according to OPEC figures that were revised slightly downwards.

On March 1, West Texas Intermediate crude hit $110.5 per barrel, the highest since May 2011, while Brent North Sea crude rocketed to $128.4 a barrel, the highest since July 2009.

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Oil prices fall as China data sparks fresh demand worries
London (AFP) March 12, 2012 - World oil prices dropped on Monday as investors fretted over the strength of worldwide energy demand following weak Chinese economic data.

New York's main contract, West Texas Intermediate crude for delivery in April, shed $1.06 to $106.34 a barrel.

Brent North Sea crude for April was down 65 cents at $125.33 in late afternoon deals.

"Crude oil fell sharply... Traders were reacting to news over the weekend that China had recorded its largest trade deficit in more than ten years," said GFT analyst David Morrison.

"This added to concerns over the outlook for global growth as austerity measures across Europe take hold."

Concerns over China's energy demand were stoked after customs data released Saturday showed the economy swung to a trade deficit of $31.48 billion in February.

The deficit -- which is the largest for at least 12 years -- comes as demand continues to falter in China's key US and European export markets.

The data follow figures on Friday which showed that China's inflation rate slowed sharply in February and factory output growth also slipped.

China's weak figures outweighed bullish data showing that its monthly crude oil imports reached a record monthly high in February and US figures showing a further surge in jobs growth in the world's leading economy, analysts said.

It imported 23.64 million tonnes of crude oil last month, equivalent to 5.98 million barrels a day.

China is the world's biggest energy consumer, while the United States is the largest consumer of crude oil.

Morrison added: "However, while Chinese exports fell, the country continues to import record amounts of crude oil.

"This suggests that China is acting strategically to boost its energy holdings, no doubt mindful of growing geopolitical risks, and anxious to ensure that it will be able to keep abreast of future domestic demand."

Oil prices also sank on Monday as investors opted to cash in their recent gains and took their cue from the firmer dollar, which makes raw materials such as oil more expensive for buyers holding weaker currencies.

"It looks like the week started on the negative side, as crude oil prices retreated," added Sucden oil analyst Myrto Sokou on Monday.

"It seems that investors remain cautious about the level of the oil demand. "Investors were prompted to some profit taking today, following the strong upside rally in crude oil prices last week."

The market advanced last week by an upbeat US non-farm payrolls report and after Greece clinched a vital debt-swap deal with private creditors to avert bankruptcy.


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