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US crude holds steady, Brent rallies on supply concerns

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Oil prices in New York held steady today, pressures by downgrades of demand forecasts by the Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA).

OPEC, which accounts for 40 percent of global crude oil supplies, yesterday decided to slash its oil demand projections by 180,000 barrels a day (bopd) for the current year and by 100,000 bopd for 2012, citing the impact of slowing economic growth on energy demand.

IEA followed the cartel today, lowering its 2012 demand forecasts by 210,000 to 90.5 million bopd.

However, while US benchmark crude made little headway, Brent crude added more than US1 per barrel after the IEA report said that European oil inventories have fallen to the lowest level in over eight years.

Oil stockpiles in Europe have shed 25 million barrels so far in 2011, falling to 921.2 million barrels in August compared to 985.9 million a year earlier.

IEA listed disruptions in North Sea crude supplies and the civil war in Libya among the main reasons for the drawdown in oil supplies in Europe.

In addition, Brent crude was boosted by today’s recapitalisation plan, which was unveiled by president of the European Commission Jose Manuel Barroso in the EU’s latest attempts to restore confidence that Europe has its fiscal problems under control.

Barroso urged the EU to coordinate efforts to strengthen Europe’s banking system, while saying that banks that receive financial aid from Europe’s bailout fund should be prevented from paying dividends.

The EC president’s comments also strengthened the euro, which rallied against the US dollar this afternoon, making the dollar-denominated crude cheaper for holders of other currencies.

US light, sweet crude
for November delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), was unchanged at US$85.79/barrel in morning trade in New York.

November Brent crude rallied US$1.16 to US$112.03/barrel on the ICE Exchange this afternoon.

Today’s top risers in the oil and gas sector were:

Desire Petroleum (LON:DES)
, up 21 percent at 20.88 pence at midday

San Leon Energy (LON:SLE)
, up 8.5 percent at 15.5 pence

Argos Resources (LON:ARG), up 7.5 percent at 23.5 pence

Tower Resources (LON:TRP), up 6.5 percent at 3.47 pence

Exillon Energy (LON:EXI), up 6.5 percent at 267.3 pence

The top fallers were:

Cadogan Petroleum (LON:CAD), down 12.5 percent at 43.75 pence at midday

Nighthawk Energy (LON:HAWK), down 8.5 percent at 3.15 pence

Gasol (LON:GAS), down 5.5 percent at 0.566 pence

Matra Petroleum (LON:MTA), down 5.5 percent at 0.968 pence

Petroceltic International (LON:PCI), down 5 percent at 5.31 pence

Quick facts: Brent Crude Oil

Price: - -

LSE:BRENT
Market: LSE
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