StatoilHydro Sees Oil Below $100 a Barrel by Year End

By Marianne Stigset

Sept. 8 (Bloomberg) -- StatoilHydro ASA, Norway's largest oil and gas company, expects the price of oil to fall to less than $100 barrel by year end amid near-record OPEC production and slowing global economic growth.

Current output by the Organization of Petroleum Exporting Countries is increasing commercial oil inventories, said Sandrine Toerstad, head of market analysis at the Stavanger- based company. The global economy, led by the U.S., the European Union and Japan, will weaken further next year and cut demand for crude, she said, adding that oil will average less than $110 a barrel in 2009.

``OPEC will need to trim down output, although it's unlikely that they will reduce their quota tomorrow'' at a meeting in Vienna, Toerstad said at a seminar in Oslo today. ``They're likely to reduce it unofficially'' to meet the set quota levels, she said.

OPEC members with quotas produced about 592,000 barrels a day more than their official limit of 29.673 million last month, according to Bloomberg estimates. Iraq has no quota. Output from all 13 members slipped 200,000 barrels a day from July's record.

Fear of Plunge

Iran and Venezuela will urge the group at the meeting tomorrow to trim supplies to prevent oil prices retreating below $100 a barrel. The cartel is more likely to reduce its quota at a meeting in Algeria in December, Toerstad said.

``They'll want to reduce the quota ahead of the maintenance shutdowns of the major refineries this spring,'' she said. ``There is a fear that the price decline will get out of control and plunge.''

Oil has dropped $40 a barrel, or 27 percent, from a record $147.27 on July 11 as slowing global growth as reduced demand and the dollar halted a three-year slide against the euro. Oil was up $1.05, or 1 percent, to $107.28 a barrel in after-hours electronic trading on the New York Mercantile Exchange as of 10:59 a.m. in Oslo.

Norway, the world's fifth biggest oil exporter, isn't a member of OPEC.

To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net