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New York's main contract, West Texas Intermediate crude for delivery in April, shed $US1.06 to close at $US106.34 a barrel. Brent North Sea crude for April settled at $US125.34 a barrel in London trade, down 64 US cents from Friday's closing level.

"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," GFT analyst David Morrison said.

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

World oil prices have dropped as investors fretted over the strength of worldwide energy demand following weak Chinese economic data.

Saturday showed the Chinese economy swung to a trade deficit of $US31.48 billion ($A29.93 billion) in February, as crude oil and other key raw material imports soared.

"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," Morrison said.

Oil traders meanwhile also booked profits from recent price rallies.

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

Iran is seeking outlets for its oil after U.S. and European sanctions cut off transactions with the country’s banking system to pressure the Islamic republic into reining in its nuclear program. The country has threatened to shut the Strait of Hormuz, a transit point for a fifth of oil traded worldwide, if sanctions are imposed on its crude exports.

State-run Kuwait Petroleum Corp. has a contingency plan if the strait is closed, Chief Executive Officer Farouk Al-Zanki said today in Kuwait, without providing details. Demand for the company’s crude oil “still looks good,” he said.

Prices are “a bit high” and should be at $100 a barrel, Mohammed Al-Rumhy, Oman’s oil minister, said in an interview at the IEF. The sultanate will produce an average 900,000 barrels a day of crude and condensate this year, little changed from the end of last year, he said.

Kuwait pumped about 3 million barrels of oil and condensates a day last month, Al-Zinki said. The U.A.E. produced 2.6 million barrels of oil a day in February, Al-Hamli told reporters. Angola is currently producing 1.7 million barrels of oil a day, according to Botelho de Vasconcelos.....read more

IMF predicted, would help Saudi Arabia's GDP growth by 7.5% (Since revised to 6.5 per cent ). With 24.9 percent of the 1,000 billion barrels proven oil reserves of OPEC, the country has the largest oil reserves in the world and is also one of the largest producers of oil, next only to Russia. IEA holds that Saudi Arabia is capable of producing up to 12 million barrels of oil a day, compared to nine million barrels a day in May. Early this year with tensions ranging in Libya, the IEA's executive director, Nobuo Tanaka had said that Saudi Arabia could easily offset any shortfall in production from Libya.

With such huge reserves, in the meeting on June 8, Saudi Arabia, along with Kuwait, and the UAE pressed for increase in production quotas. But, countries like Libya, Algeria, Venezuela, Ecuador, Iraq, Iran, were against the move. Consequently, no decision was reached and the production quotas remained unchanged. Of course, the last thing the Saudi government needs at this point is high inflation due to import of expensive food grain, offset by high transportation charges due to high oil prices. Some indicators to gauge the extent of price fluctuation in recent times: The oil price hit $101.08 (Brent crude) a barrel in February, the highest since October 2008 (In June 2008, they were jogging around $147 a barrel). In June, 2011 they fell to $90 a barrel amid fears of supply disruption due to the closure of Suez canal and Egypt unrest.

Hence, Saudi Arabia has, quite unilaterally, pledged to increase production, notwithstanding the OPEC decision. According to a Platts survey, oil production from OPEC shot up by 530,000 barrels per day in June, at a total of 29.57 million barrels per day, compared to the 29.04 million b/d in May. And guess what? Saudi Arabia's production was up by 450,000 barrels per day to reach a total of 9.5 million b/d. Kuwait, UAE too have increased production, according to the survey. And don't forget most of this increase is just enough to meet the growing demand at home.

Saudi Arabia, essentially, is putting more oil on the market to pay for generous welfare programs, basically "buying out" its population from joining in on the unrest that spread through other oil producing nations. This is unsustainable and will accelerate well depletion. At this point, no one knows the actual reserves of the country, which is dangerous in itself.

IEA's move

The twenty eight member IEA, announced its decision to would release oil, about 60 million barrel, from the strategic reserves this August. This, it said, was to compensate for the loss due to the volatile situation in Libya. It is only the third time since established in 1974 that the IEA has taken such a step. One thing to be noted is that Libya, with less than two percent of the global oil output, isn't a huge player in the oil industry. In real terms, thus, the shortfall isn't going to make any significant changes to the oil supply. From a short term perspective, this move would help lower the price of oil. (The news did ease the oil price, since regained. ) However, in the long term, the reserves have to be replaced, and if the demand rises, this short term measure will push up oil prices. 

According to Bureau of Economic analysis the US economy has declined by 1.8 percent in the first quarter. The latest U.S. job report showed a weak economic recovery with just 18,000 jobs created in June, and in the revised World economic outlook, IMF has since adjusted the growth for advanced economies to 2.5 percent from 2.6 percent. Indeed, the earthquake in Japan, the resultant disruption in the supply chain, and uncertainty with the varying pace of the economic recovery in the US economy's progress, are some of the reasons for the low demand for crude oil for the first half of 2011.

However, when US returns to faster growth, the Japanese economy bounces back, and Europe recovers from the debt crisis and thus a global recovery, what do we have in our hands, a supply deficit for oil.

In fact, Goldman predicts that the world economy would accelerate in the second half of the year itself, increasing demand. "Prices and returns will rise further later this year and into 2012," a report from the bank said, predicting that Brent crude would average at $120 in six months and $130 in 2012. An EIA report estimates that the oil demand will surpass production by 1.16 million barrels per day this year. The reports also suggests that the oil demand around the world to rise by 1.6 million bbl/d in 2012, a gap of 0.5 million barrels per day (only with increased production). The IMF, for its part, in the updated World Economic Outlook (WEO) for 2011, puts the assumed price for oil based on futures market at $105.25 in 2012. Analyst Hussein Allidina, from Morgan Stanley, said "We remain bullish on oil, particularly in the second half, and expect inventory draws will prompt OPEC to increase production, at the expense of spare capacity".

Of course, by 2012, we'll know which of these predictions come true, though wishful thinking hopes that, somehow, we've got it all wrong. Banks are bullish, you know why. But can we sit back, wait and watch as oil prices spiral, because spare capacity was exhausted?

So, really, did the Mayans predict the end of the world in 2012 or did they run out of space on their calendar? More like what Lady Macbeth said, "Almost at odds with morning, which is which." Superstitions and old wives tales aside, if we look at the oil supply/demand numbers, with close to 7 billion people, we are approaching the planet's carrying capacity. With the oil market set to go through a lot of stress in the coming year, 2012 will surely mark a turning point to remember. .....READ MORE

OPEC delegates state that OPEC is unwilling to state individual output production quotas for members. The last output production limit had been set in 2008 for 11 members excluding Iraq. This quota was implemented to restrict supply as recession was affecting demand and prices. This imposed quota was never revised even though members had already raised production from mid -2009 as demand and prices recovered. The last OPEC meet failed to reach a decision concerning output, however it was declared that the quota imposed in 2008 was irrelevant in the present scenario.

OPEC is now hesitant to impose individual production quotas on members. Some members such as Algeria or Iran may find it difficult to admit that their production has come down since the last agreement. The previous quotas had been set by OPEC by taking into account the oil reserves and production capacity of members. The previous unrealistic quotas were not much of a problem as Saudi Arabia and others pumped more oil to make up for the shortage left by Libya.

A slow economic growth in the year 2012 may seriously harm the OPEC members if there are no specified production limits. Analysts claim that it seems unlikely that OPEC will have standard quotas for production. The reason stated is that key members of OPEC differ on outlook towards production.

OPEC needs to revise individual targets that will fit within the framework of overall targets and be agreeable to the members....READ MORE

OPEC oil ministers are likely to leave their 24.8 million barrel-a-day output quota unchanged when they meet in Vienna as Libyan production recovers following its civil conflict. The group’s last meeting in June was the first time in at least 20 years that it had failed to reach an agreement on production.

Iran's OPEC governor said on Saturday the oil market was "relatively balanced", indicating the country will not push for any major shift in an OPEC ministerial meeting next week.

"The market is relatively balanced ... and my feeling is there is a general sentiment among the OPEC members to make a decision based on the real needs of the market," Mohammad Ali Khatibi told Reuters.

Khatibi's comments came days ahead of a meeting of the Organization of the Petroleum Exporting Countries in Vienna on Wednesday.

Iran, OPEC's leading price hawk, said in November it would ask member states to reduce output back to pre-Libya crisis volumes, but it has since backed down from that stance and now appears likely to agree a new production target that legitimises current output of around 30 million barrels a day.

"If there is a real need in the market, an appropriate decision should be made," Khatibi said. "But if there is a surplus of oil supply in the future, a solution should be sought for that."

"The decision should be made on the need of the market. OPEC has always sought a balanced market in which there is neither shortage nor surplus."

Talks in OPEC's last meeting in June broke down in acrimony as members failed to reach consensus over output.

Iran, which holds the OPEC rotating presidency, successfully opposed a move led by Saudi Arabia to raise the OPEC ceiling but the top exporter went ahead and raised output unilaterally. Saudi Arabia says it is now pumping at its highest rate for decades....READ MORE RESOURCES

NEW YORK, 1028 Xinhua profit-taking by investors affected by the operation, 28 after international oil prices rose following the previous session to close at down.

The recent trend of international oil prices and the process of resolving the debt crisis in Europe associated with a high degree. 27 EU leaders to

reach a settlement of the debt crisis package, which greatly boosted the market sentiment, and promote oil prices rose 4 percent.

But investors and market analysts believe the market for the debt crisis in Europe over the reaction solution, because the program is currently in Greece to write down the debt, how to increase Europe’s financial stability mechanism is still a lack of such details. Market doubt, the intensity of the program is not enough, is unlikely to effectively curb the debt crisis, optimism began to wane. Therefore, investors take profit-taking, selecting can be secured.

In addition, from the crude oil supply and demand point of view, with the heavy debt burden, Greece, Italy and other countries to slash government spending, the European oil demand will continue to decrease. The data showed Japan the same day, nine plants to reduce output 6 for the first time, to add pressure on global oil demand outlook.

The same time, stabilize the situation in Libya, in its crude oil exports are expected to recover. Supply and demand changes to a more global representation of the meaning of Brent crude oil constitute more pressure.

To closing, the New York Mercantile Exchange, light sweet crude for delivery fell 64 cents to settle at $ 93.32 a barrel, down 0.68%. Then rose $ 5.92 the week, or 6.77%.

12 delivery London, Brent crude oil futures prices fell $ 2.17 to close at $ 109.91 a barrel, down 1.94%. Closed the week flat base, only inched up 35 cents ....READ MORE

Oil prices dropped Friday as investors acknowledged that Europe needs to tighten its belt for years to work through a credit crisis and factory production stalled in Japan.

Benchmark crude fell 64 cents to end the day at $93.32 per barrel in New York. Brent crude, which is used to price foreign oil, lost $2.17 to finish at $109.91 per barrel in London.

Prices have seesawed for weeks while Europe tried to deal with Greece’s debt troubles. Oil soared Thursday after eurozone leaders hammered out an agreement to avoid default, and economic news in the U.S. soothed fears of another recession. Still, analysts agreed that Europe has much more work to do and the U.S. economy is not up to full steam.

“It’s going to be a while before we see a broad-based solution to the problem,” independent analyst Jim Ritterbusch said.

Europe will likely see energy demand fall while Greece and other countries cut spending to get their national debts under control. Meanwhile one of the continent’s biggest oil suppliers, Libya, is expected to resume exports this year after an eight-month stoppage because of unrest there.

Japan on Friday said that factory production fell in September for the first time in six months. The export-dependent nation produced fewer cars, chip-related machines and cellphones as the yen strengthened against other currencies, including the dollar. That made Japanese goods less attractive to foreign buyers and could mean demand for oil will fall as factories slow.

On Wall Street the major stock indexes were little changed after Thursday’s big rally. The Dow Jones industrial average, the S&P 500 and the Nasdaq composite index moved between small gains and losses.

At the pump, gasoline prices rose less than a penny to a national average of $3.448 per gallon, according to AAA, Wright Express and Oil Price Information Service. Gasoline prices are 64 cents higher than they were a year ago.

Natural gas futures prices jumped more than 4 percent as colder weather blanketed much of the eastern U.S. Natural gas rose 16 cents, or 4.2 percent, to end the day at $3.923 per 1,000 cubic feet.

In other energy trading, heating oil lost 4 cents to end at $3.0592 per gallon, while gasoline futures fell 6 cents to finish at $2.6822 per gallon.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed....RESOURCES

Historically, crude oil or petroleum prices in the United States have been affected by a variety of global factors. In the beginning of the 20th century, crude oil production began to be controlled by the US government, with restrictions on the amount of production and price to conserve this valuable energy source. Following the Second World War, demand for petroleum could not be met through local production alone, and the US started importing increasing quantities of crude oil.

Up until the 1972 war between Israel and Syria and Egypt, global crude oil prices were fairly stable at about $3 a barrel. An oil embargo by major oil-producing countries in 1973 led to the first steep increase in crude oil prices, to $12 a barrel. Following the Iran revolution of 1979 and the Iran-Iraq war, crude oil prices rose to $35 a barrel by 1981. However, by 1986, the OPEC cartel’s control over global crude oil prices began to falter as member countries exceeded their production limits, dropping prices to around $10 a barrel. Prices gradually rose over the next decade, but the South-East Asian economic crisis of 1998 drove prices down again as demand dropped. Prices rose to $25 a barrel by the end of the 20th century, but a variety of factors, including reduced supply and war, made crude oil prices spiral to $70 a barrel in 2005.

Today, trading in oil futures on the floor of the New York Mercantile Exchange (NYMEX) increasingly drives crude oil prices in the US. Increasing consumption has resulted in increasing dependence on imported crude oil supplies. While futures trading will continue to determine crude oil prices in the foreseeable future, oil conservation and the development of alternative and renewable energy sources are both essential to ensure a stable energy supply and price in the longer term.

Oil Prices provides detailed information on Oil Prices, Crude Oil Prices, Current Oil Prices, Heating Oil Prices and more. Oil Prices is affiliated with Natural Gas Prices.,,,,READMORE

With the global demand for crude oil floundering, representatives from OPEC have voiced their concerns over the oil commodity’s tumbling futures.

Crude oil prices fell more than 3% in New York and London today, amid persisting worries over Greece’s potential default on its debt. OPEC’s recent meet in Dubai sparked some harsh criticism towards Europe’s inability to handle its deteriorating debt situation and the E.U.’s largely inconclusive conference in Poland that was supposed to yield solutions for the issue.

OPEC has issued warning to the economically-floundering western nations, stating that if the economy does not receive a much-needed revival soon, billions of dollars in crude oil investments will be put at risk. The warning continued to state that severe changes to the stimulus strategies need to be made to solve unemployment issues that are crippling Europe and the U.S...READ MORE