(Updates prices, adds comments from OPEC president)
By Matthew Robinson
NEW YORK, Jan 16 (Reuters) - Oil fell on Wednesday on a
sharp build in U.S. crude stocks and rising concerns economic
problems could erode fuel demand in the world's top energy
consumer.
U.S. crude <CLc1> traded down $1.39 to $90.51 a barrel by
1912 GMT after hitting $89.26, the lowest level since Dec. 18.
London Brent crude <LCOc1> fell $1.59 to $89.39 a barrel.
U.S. crude stocks swelled 4.3 million barrels to 287.1
million barrels in the week to Jan. 11, the first build in nine
weeks and above analysts' forecasts for a 600,000 barrel rise,
U.S. Energy Information Administration data showed. []
"The latest EIA data confirm the weakening trend in demand
and will keep the market bearish in combination with
recessionary fears that have hit all financial markets," said
Tom Knight, trader with Truman Arnold.
U.S. crude futures have fallen from a record high above
$100 hit earlier this month on concerns a potential U.S.
recession could hurt demand growth, pushing analysts to revise
their consumption forecasts.
The International Energy Agency, adviser to industrialized
countries, on Wednesday cut its 2008 global demand growth
forecast by 130,000 barrels per day to 1.98 million bpd and
said it may lower the figure further.
"We have seen some negative studies on the macroeconomic
front, and the IEA report this morning is moderately bearish,"
said Mike Wittner, head of oil research at Societe Generale.
"Looking forward, I think prices are going to fall further.
Essentially, the market seems to be balanced in the first
quarter this year."
The IEA also warned, however, that oil inventories in
member countries of the Organization for Economic Cooperation
and Development had fallen to the lowest point in more than
four years.
"The oil market has tightened. There's no doubt about
that," said Lawrence Eagles, head of the IEA's Oil Industry and
Markets division. "In terms of forward cover, we're at the
lowest since November 2003."
OPEC DECISION
U.S. President George W. Bush called upon oil cartel OPEC
to hike output to help lower prices during a trip to the Middle
East this week.
OPEC officials say factors beyond their control sent oil on
its record run to triple digits, and Qatar on Wednesday said
the producer group did not have to hike output when it meets
again in February.
"I don't think the market needs more oil," Qatari Oil
Minister Abdullah al-Attiyah told Reuters. []
OPEC President Chakib Khelil said oil prices would likely
hold between $80 and $90 in the first quarter. He added if oil
inventories recovered in the second quarter -- when demand
typically dips -- he saw no reason for the group to raise
production. []
Saudi Arabia, the world's top oil exporter, vowed on
Tuesday to boost output when the market needed more, although
Saudi Oil Minister Ali al-Naimi did not say whether OPEC would
do so at its meeting in Vienna.
(Additional reporting by Maryelle Demongeot in Singapore and
Ikuko Kao and Alex Lawler in London; Editing by Christian
Wiessner)
