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New York oil price heads to 35 dollars

LONDON - The price of oil fell towards 35 dollars a barrel in New York on Thursday in a market plagued by weak energy demand reflected in new US data that showed surging crude stockpiles.

New York's main futures contract, light sweet crude for delivery in March, dropped 26 cents to 35.68 dollars a barrel.

The contract is nearing five-year lows of 32.20 dollars hit on December 18.

In London, Brent North Sea crude for March climbed 51 cents to 44.79 dollars a barrel.

The US Department of Energy (DoE) said in its weekly report on Wednesday that American crude stockpiles soared by 4.7 million barrels in the week ending February 6. That was higher than market expectations of a 3.0-million-barrel gain.

"Basically from a fundamental point of view, I cannot see a strong market... because demand is not strong," said Ken Hasegawa, manager of the energy desk at Newedge Japan brokerage.

The industrialised nations' energy watchdog, the International Energy Agency (IEA), on Wednesday again cut its forecast for global oil demand this year.

It forecast that demand would measure 84.7 million barrels per day (bpd) on average in 2009 -- 570,000 bpd less than its last forecast made in January.

At this level, demand would be 1.1 percent or 1.0 million bpd less than in 2008, when demand also fell compared with the year earlier.

The IEA also warned about a future supply crunch because of current low investment levels.

Meanwhile the man in charge of selling Iraq's oil said on Thursday it would take at least two years for crude prices to recover to between 70-75 dollars a barrel, so bad is the global economic outlook.

Falah al-Amiri, head of the war-torn country's State Oil Marketing Organisation (SOMO), warned that the sudden downturn in the Chinese economy has compounded an already bleak situation with US and European demand weakening.

"We need at least another two years to make the price of oil 70 to 75 dollars," Amiri, an OPEC board governor, told AFP in an interview.

"Growth in China was supposed to be nine percent, now they have reduced that to four percent. America and all of Europe is in recession, especially Britain. The picture is gloom ... the system is collapsing," he said.

Oil prices have tumbled from record highs of above 147 dollars reached last July. Such high prices helped energy giant Total, France's biggest firm, to enjoy the highest annual net profit in French corporate history.

On Thursday, Total reported net profit of 13.9 billion euros (18.0 billion dollars).