NEW YORK (AFP) — Oil prices receded Wednesday in reaction to rising US crude reserves and after US President George W. Bush called on OPEC members to hike output, traders said.
Meanwhile, the International Energy Agency kept its 2008 forecast for oil demand unchanged despite growing expectations of a recession in the United States, which could curb demand.
New York's main oil futures contract, light sweet crude for delivery in February, closed down 1.06 dollars at 90.84 dollars per barrel, after earlier falling as low as 89.26.
In London, Brent North Sea crude for February delivery settled down 1.23 dollars at 89.75 dollars per barrel, after striking a low point of 88.71.
Prices fell after the US Department of Energy (DoE) said American reserves of crude climbed by 4.3 million barrels in the week ended January 11.
The reading outshone market expectations for a gain of 1.25 million barrels and broke an eight-week run of successive falls.
"The inventory data is very bearish," said Nas Nijjar at CMC Capital Markets. "Everything is a lot higher than expected."
Oil prices remain at elevated levels, but have shed some 10 dollars since striking a record high in New York of 100.09 dollars per barrel earlier this month.
OPEC Secretary General Abdullah al-Badri told AFP on Wednesday that high oil prices were not caused by a shortage of oil supplies and that other factors were to blame.
Stressing that the organisation saw no shortages, he said OPEC would be prepared to increase production if it saw evidence that supply and demand were out of balance.
The United States, meanwhile, is facing recession fears at home as the collapse of the housing market combines with high oil prices to make the economy a key issue in the campaign for the November presidential election.
"Sentiment amongst market participants has really dropped as it is looking more and more likely that the US is sliding into recession," Sucden oil analyst Nimit Khamar said.
Bush, currently on a tour of the Middle East, has voiced hope this week that the Organization of the Petroleum Exporting Countries would increase oil output to combat high prices, after his talks with King Abdullah of Saudi Arabia, the world's top crude producer.
"The president said there's a hope that as a result of these conversations that OPEC would be encouraged to authorise an increase in production," White House spokeswoman Dana Perino said earlier Wednesday after Bush arrived in Egypt from Saudi Arabia.
"He's worried about high oil prices and how they can negatively affect economies around the world," Perino added.
OPEC again insisted it was not responsible for the high cost of crude.
"Let me be clear, the high prices which we are witnessing are not because of any shortage of crude oil in the market," al-Badri said in an email reply to questions submitted by AFP.
"OPEC is constantly monitoring the oil market and if at any time fundamentals justified such a move, the Organization stands ready to raise production," he said.
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