Oil prices fell more than a dollar to $45 (€37.24) yesterday, in a third day of losses as a more optimistic Iraq export picture helped unwind some of the supply worries that have lifted the market to historic levels.
US light crude fell $1.05 to $45.00 a barrel, slipping further from last week's $49.40 peak, which was the highest level in 21 years of New York oil futures trading. London Brent crude lost 81 cents to $42.22 a barrel.
The downturn followed a failure to hit the psychological $50 mark in New York, together with the resumption of full tilt Iraqi exports from the south and restored flows in the north. Some analysts were starting to wonder whether prices had peaked after this year's near 40 per cent gains.
"Unless the market's worst fears of a physical supply disruption are realised, crude prices may finally be close to a turning point," wrote independent oil analyst Mr Geoff Pyne.
Citing a more stable outlook for Venezuela, optimism for Yukos oil exports and more predictable Iraqi flows, he added: "With this background there are few excuses for maintaining the recent risk premium, which we estimate at upwards of $10 per barrel."
Iraq resumed pumping crude oil along its northern Kirkuk pipeline to the Turkish Mediterranean port of Ceyhan late on Friday, at around 450,000 barrels per day (bpd) - just over half normal capacity. Iraq last sold oil pumped from Kirkuk in late May.
Authorities have also restored full exports from the south, which continued yesterday despite renewed clashes in Basra city. Reduced flows from Iraq and concern that the financial turmoil at Russia's top producer Yukos could ultimately disrupt supplies have helped drive oil prices up $10 since the end of June. Rapid demand growth has left world oil supplies with little leeway to make up for disruption.
The Organisation of the Petroleum Exporting Countries (OPEC) is pumping about 30 million bpd, with only Saudi Arabia holding any significant spare capacity.
Nigeria's top oil official said on yesterday that more production from the OPEC cartel would not lower oil prices and that crude would stay above the group's $22-$28 a barrel target range.
"We still maintain the position that the market is well-supplied. Hedge funds are the main problem. Lifting quotas will not solve the problem," Nigeria's presidential adviser on petroleum, Mr Edmund Daukoru, said.
Fuel demand has been growing at the fastest rate in 24 years despite the price surge, but worries linger that world economic growth could suffer.
