Oil down as report rattles confidence

Oil down as report rattles confidence

SINGAPORE (Reuters): Crude prices in Asia were weaker on
Thursday, falling from 22-month highs after a report raised the
prospect of OPEC slightly loosening the production taps.

The October New York Mercantile Exchange (NYMEX) crude
futures, trading on the after-hours ACCESS system, were last
traded at US$21.75 per barrel at 0710 GMT, 24 cents lower than
New York.

October peaked at $22.29 -- a 22-month high -- in New York on
Wednesday but then settled at $21.99 by the close, 12 cents down
on the day.

On the Singapore International Monetary Exchange (SIMEX),
October Brent crude was offered at $20.96, but no bids emerged
and no trades had been done.

In the London market, the contract closed 22 cents down at
$21.11 on the International Petroleum Exchange (IPE).

Traders said oil prices were correcting down, although some
bearish sentiment was seeping into the market after a report of
higher OPEC output and a build in crude stocks in the United
States.

A report by consultant Petrologistics said that OPEC output
rose to 26.705 million barrels per day (bpd) in August, from
26.505 million bpd in July and 26.3 million bpd in June.

This was seen as a sign that higher prices had started to
tempt some OPEC members to loosen the taps.

"Although some data for July remains doubtful, the overall
trend is becoming clear; supply rises as prices firm,"
Petrologistics said in a report.

Data from the American Petroleum Institute (API) and the U.S.
Department of Energy, which earlier this week showed crude stocks
up week-on-week, also added a bearish element to the market.

Analysts said U.S. stocks have fallen significantly from the
high levels of early this year, and are lower compared to last
year.

But they were still higher than the five-year average, they
said.

Nevertheless, continued cuts by OPEC are expected to drain the
global surplus within months, resulting in tight supplies as the
northern hemisphere moves into the high-demand winter season.

Crude prices have doubled in the last six months following the
OPEC move to cut production in March.

But several key OPEC members have said the cuts should remain
in place until April next year as originally planned, despite the
price rally, since stocks were high.

A meeting in Caracas on Saturday between oil ministers of
Saudi Arabia, Venezuela and non-Mexico, the architects of the
March global supply cuts, assured the market that the supply
curbs would not be relaxed when OPEC next meets on September 22.