Oil prices to remain high next year: OPEC official

Oil prices to remain high next year: OPEC official

Perrine Faye, Agence France-Presse, London

Oil prices fell heavily in London on Monday after industrial
powers had agreed to release emergency supplies of crude to
counter severe disruption by Hurricane Katrina to oil production
in the Gulf of Mexico.

The price of Brent North Sea crude for October delivery fell
by US$1.43 to $64.63 per barrel in electronic deals. It had
closed down $1.66 on Friday after the International Energy Agency
(IEA) said it would release 60 million barrels of crude products.

The market for trading in New York's main contract, light
sweet crude for delivery in October, was closed on Monday owing
to the Labor Day public holiday in the United States. It had
ended $1.90 lower at $67.57 per barrel on Friday.

Prices were falling because the "International Energy Agency
said it would release oil reserves to help ease the U.S. energy
crisis after Hurricane Katrina", Sucden analyst Sam Tilley said.

"Europe and Japan has stocks of much-needed gasoline, while
the U.S. government has only crude oil and a small stockpile of
heating oil," he added.

U.S. Energy Secretary Samuel Bodman had said on Friday that
the United States would sell 30 million barrels of crude oil from
its Strategic Petroleum Reserve on the market.

Another 30 million barrels of crude products such as gasoline,
or petrol, was to be released by other members of the 26-nation
IEA, with European countries expected to contribute the lion's
share.

The initiative will make available to the market two million
barrels of strategic oil reserves a day for an initial period of
30 days.

Oil prices have plunged since reaching historic high points
early last week after Katrina swept through vital oil
installations in the southern United States and the Gulf of
Mexico.

New York's main contract last o Tuesday hit a record-high
$70.85 per barrel, while in London Brent reached an all-time high
$68.89 -- leaving prices double the levels in 2003.

Oil prices have shot up during the past couple of years,
largely owing to increased demand in China at a time when the
world's refineries are working flat out.

However they have fallen heavily since Friday, also as
production operations slowly resume in the Gulf of Mexico, which
normally supplies a quarter of total U.S. crude.

"It's a combination of European countries releasing some of
their strategic stockpiles and also the oil system in the US is
slowly building up," Investec analyst Bruce Evers said.

"From 10 percent operating capacity last week, it's now at
about 20 percent, with power starting to be restored and some
plants functioning again, even though there are still a fair
number of refineries that are completely out of action and
probably will be for some months because of the extensive
flooding," he added.