TEHRAN (FNA)- Oil prices fell below $105 Friday on concerns over slowing energy demand and a strong US currency, while the market awaited next week’s OPEC meeting on crude output levels, traders said.
Brent North Sea crude for delivery in October dropped 1.45 dollars to 104.85 dollars a barrel in electronic deals.
New York’s main contract, light sweet crude for October, fell 1.49 dollars to 106.40 dollars a barrel.
“Crude prices featured on the downside on persistent concerns over weakening oil demand and as the US dollar continued to appreciate,” said Nimit Khamar, an oil analyst at the Sucden brokerage in London.
“The outlook for global economies is looking far from rosy, and is fuelling concerns over demand destruction and pushing oil prices lower.
“OPEC is set to meet on 9th September (Tuesday), with many market participants expecting them to reduce production to prevent over supply,” Khamar added.
The dollar struck a near 11-month high versus the euro Friday on news of slumping industrial output in Germany, Europe’s biggest economy, and as the market awaited key US jobs data, traders said.
The euro fell to 1.4196 dollars in midday London trade – the lowest level since October 24, 2007.
A strong US currency makes dollar-priced oil more expensive for buyers holding weaker currencies, dampening demand for crude, which is already falling because of a global economic slowdown.
The Organization of the Petroleum Exporting Countries (OPEC) meets next week in Vienna, home to the cartel’s headquarters, amid speculation that the group which produces 40 percent of the world’s oil may decide to cut output as prices slide toward 100 dollars.
Brent crude had ended down nearly two dollars on Thursday as the dollar began strengthening against the euro on eurozone economic woes, while the market shrugged off a larger-than-expected decline in US energy stockpiles, dealers said.
The dollar also found support in a survey by the Institute for Supply Management showing US service sector activity rebounded unexpectedly in August.
Many analysts expect oil prices to continue to fall because of fears of recession in the United States and Europe.
Crude oil, which hit a record high 147.27 dollars on July 11 in New York, has lost nearly 40 dollars in less than two months.
Oil prices had broken through 100 dollars a barrel for the first time at the start of January on geo-political concerns, notably surrounding the ongoing nuclear power dispute between the West and Iran, which is a major producer and exporter of crude oil.
At the time Analysts viewed US-led sanctions against Iran and geopolitical factors as among the main causes of recent hike in oil prices, saying that fears of a new Middle East conflict are behind the new high for oil prices.
Market analysts, specially those from consumer nations, take Bush administration responsible for the price hikes during the last year, saying that these are frequent sanctions and the “rumors of US and Israeli action against Iran circulating in the markets” that affected oil and the dollar.
Prices dropped by around 20 dollars last month after West softened rhetoric in the dispute with Iran.