Oil mixed after IEA warning on $100 price

Oil was mixed in Asian trade today after the International Energy Agency warned that high crude prices posed a risk to the global economy.

New York's main contract, light sweet crude for February delivery, gained five cents to $91.43 and Brent North Sea crude for March delivery fell 21 cents to $97.59.

The IEA in its monthly report yesterday said "recent price levels already pose a real economic risk -- something of deep concern to producers and consumers alike."

Crude prices had rallied to near $100 a barrel in recent trading sessions, fuelled by expectation of strong demand as the global economic recovery continued.

 

Oil prices first hit $100 in January 2008.

Oil prices of $100 a barrel represent a burden of five per cent of gross domestic product on the global economy, the IEA calculated, and said such levels in the past "have clearly been associated with economic problems."

"Ultimately, oil producers, financial investors and consumers (notably import-dependent developing countries) all suffer under such a scenario," the IEA report said.

The IEA, the energy policy and monitoring arm of the 34-member Organisation for Economic Cooperation and Development, said growth in oil demand in 2010 was at one of the strongest rates in three decades, albeit from a low crisis level.

Oil demand grew by 3.2 per cent, an increase of 2.7 million barrels per day (mbd) year-on-year to 87.7 mbd, it said.

Moreover, "such demand strength appears to be more related to a buoyant economic recovery than to the frigid weather conditions that prevailed in most of the northern hemisphere in late 2010."