SINGAPORE, Sept 21 Oil prices slipped but held near $ 82 a barrel on Friday, after hittin

Subscribe to Oneindia News

SINGAPORE, Sept 21 (Reuters) Oil prices slipped but held near $82 a barrel on Friday, after hitting a record above $84 the previous day as a tropical depression forced the shutdown of Gulf of Mexico output ahead of peak winter fuel demand.

U.S. crude for November delivery, the new front month dipped 13 cents to $81.65 a barrel by 0520 GMT, after the October contract expired up $1.39 at $83.32 on Thursday, when it hit a record for the seventh straight session of $84.10.

London Brent November crude edged down 22 cents to $78.87, after 62-cent gains on Thursday.

''I think the speculators will try and push it as high as possible as there doesn't seem to be any economic impact from these high prices. The Fed cut gave the bulls more ammunition,'' said Gerard Rigby from Fuel First Consulting in Sydney.

Oil has traded above $80 for the past week, despite OPEC's decision last week to raise output from November, on thinning U.S. inventories, a weakening dollar, a U.S. interest rate cut that eased fears of a recession and on storm risks.

Energy companies have shut over 360,100 barrels per day (bpd) of Gulf of Mexico output, or over a quarter of the Gulf's crude production, and 16.7 percent of natural gas production as a tropical depression blew into the Gulf.

The storm shutdowns come after U.S. crude stocks in the world's top consumer fell for the fourth straight week by a higher-than-expected 3.8 million barrels last week, leaving them four percent down from this time last year Iran's OPEC governor said the jump in oil prices, which have climbed a third this year and quadrupled since 2002, was not sustainable.

Hossein Kazempour Ardebili told state radio crude prices had risen on the back of a range of factors, such as geopolitical issues and turmoil in financial markets, and added that ''this situation is not stable and cannot be permanent''.

However, demand from buyers in other currencies has been given a fillip by the weakening of the U.S. dollar to a record low against the euro on Thursday.

U.S. Federal Reserve chief Ben Bernanke also said the Fed was committed to preventing new lending problems, which had sparked fears of an economic slowdown that could have hurt energy demand.

''It's more a matter of when speculators want to take profit or if OPEC announce another production increase. Otherwise I can't see a reason for prices to fall,'' Rigby said.

An OPEC source told Reuters on Tuesday that the producer group will probably hold consultations about a further output hike if oil stays above $80 for more than 15-20 days. OPEC has agreed to a 500,000 bpd increase from Nov. 1, but analysts say this is too little to calm fears over winter supplies.

REUTERS SBA DS1126

Please Wait while comments are loading...