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Abu Dhabi: Global oil prices may weaken to $110 a barrel or lower this week due to heavy selling pressure in the oil futures market and declining demand from major consumer nations, say industry experts.
"The markets will watch out for Ben Bernanke's statements on the Federal Reserve, European data on economic growth and stronger reaction from the world community against Russia's military action in Georgia," said Dalton Garis, associate professor of Economics at Abu Dhabi's Petroleum Institute.
"If the markets ignore these indicators, I would expect them to fall further."
International oil prices have fallen sharply from a lifetime high of $147.27 a barrel on July 11, as an economic downturn in the US, the world's biggest oil importer, has slowed consumer demand.
There are also fears the world's second biggest economy, Japan, may be slipping into recession. The dollar has strengthened against the Euro, which has contributed to the bearish sentiments currently prevailing on the world's oil markets.
According to the August oil market report by the Organisation of Petroleum Exporting Countries (Opec), average US crude oil imports in the first seven months of 2008 were 9.84 million barrels per day (bpd), 1.7 per cent or 173,000 bpd lower than their average for the first seven months of 2007.
"This decline is attributed to the overall state of the US economy which has hit sales for almost all products, apart from gasoil, with gasoline and jet fuel sales declining since December last year. US product imports in July were at their lowest level since January 2008, Opec said.
"If the dollar continues to strengthen, it will almost certainly lead to lower oil prices. However, there's a hurricane coming in the Gulf of Mexico and its strength may change the dynamics of the market, short-term," said Kate Dourian, Middle East editor of Platts.
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