Oil extends fall as Saudis hint at raising supply

[January 25, 2011]  BANGKOK (AP) -- Oil prices hung below $88 a barrel Tuesday in Asia, extending losses after the Saudi oil minister hinted the world's biggest oil producer may raise supplies to put the brakes on higher oil prices.

Benchmark crude for March delivery was down 23 cents at $87.64 a barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract lost $1.24 to settle at $87.87 a barrel on Monday

The price of oil has fallen more than 3 percent since Thursday, when it was close to $92 a barrel.

Saudi Oil Minister Ali al-Naimi said Monday he expected world oil demand will increase this year to between 1.5 million and 1.8 million barrels per day. That's higher than forecasts from the Energy Information Administration and the International Energy Agency.

Michael Lynch, president of Strategic Energy & Economic Research, said al-Naimi's comments imply that he thinks oil prices are too high, and the Organization of Petroleum Exporting Countries would take steps to bring them down.

"I think that's the first serious comment along those lines from anybody in OPEC," Lynch said. "He seems to be saying maybe the market needs more oil."

In other Nymex trading, heating oil fell 0.6 cent to $2.613 a gallon and gasoline shed 0.6 cent to $2.408 a gallon. Natural gas rose 1.3 cents to $4.593 per 1,000 cubic feet.

In London, Brent crude was down 30 cents at $96.31 a barrel on the ICE futures exchange.

[Associated Press]

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.