Oil prices edge lower in thin trade

Oil prices edge lower in thin trade

Agence France-Presse, London

Oil prices edged lower in thin trade here Monday as recent weakness continued amid a lack of fresh fundamental incentives.

Reference Brent North Sea crude for July delivery dropped six cents to US$25.12 a barrel.

In New York, July-dated light sweet crude futures fell 27 cents to 25.88 a barrel on Friday.

Dealers said with New York closed Monday and the London market set for a curtailed session, trading volumes had been extremely light.

They added that without further developments in the Middle East, the market looked set to continue to trade within a relatively narrow range, skewed towards the downside.

"The Middle East has been relegated as a driving force behind prices ... As long as there is diplomatic progress the threat of Arab pressure on the oil price is diminished," said GNI oil analyst Lawrence Eagles in a research note.

"Bearish sentiment continues to drive prices steadily lower, leaving the uptrend that has been in place since the start of the year under threat," he added.

Eagles said a growing acceptance that there was unlikely to be any significant shortage of supply in the third quarter, even if members of the Organization of Petroleum Exporting Countries (OPEC) maintained their output curbs, helped explain the recent slide in oil prices.

OPEC members, who are under pressure from consumer countries to increase output to alleviate fears that high oil prices could hinder the recovery of the global economy, are widely expected to extend output cuts agreed last year when they meet in Vienna on June 26.

However, Eagles said the recent rise in levels of U.S. oil stocks had done much to alleviate the market's concern about any impending supply shortage.

"Unless gasoline demand proves exceptional over the next few weeks, there will be few fears that by leaving quotas unchanged in the third quarter OPEC will be squeezing consumers," he said.