World crude prices fell on Monday largely in reaction to warmer-than-normal temperatures in the United States, despite expectations that the Organisation of the Petroleum Exporting Countries (Opec) oil cartel is poised to trim its production.
New York’s main contract, light sweet crude for delivery in January, closed down 81 cents at $61,22 per barrel. In London, Brent North Sea crude for January delivery settled down 36 cents at $61,84.
Oil prices were weighed down by forecasts of warmer weather in the US, Barclays Capital analyst Kevin Norrish said.
Warmer-than-usual temperatures are expected across the eastern US over the next six to 10 days, according to the country’s national weather service. Milder weather is likely to reduce demand for heating fuel, allowing inventories to rise, traders said.
”Meanwhile, speculation over Opec’s next move remains the dominant theme in the market at present,” Norrish said. ”Overall consensus seems to be emerging within Opec to make further production cuts when the cartel meets on Thursday.”
Ministers from the 11-member Opec are to convene in Abuja, Nigeria, this week to mull their output quotas.
The cartel, which regulates its oil supply to maximise export revenues and control prices, is eager to keep crude about $60 per barrel, and a further output cut would support the market heading into the northern-hemisphere winter.
”There is a fair bit of anticipation in the market that Opec is going to cut output,” said Tobin Gorey, a commodities analyst with the Commonwealth Bank of Australia. ”That is the main focus for this week … definitely everybody is watching that,” he said.
Opec lowered its output quota at its last meeting in October to stem a slide in prices, which had fallen from a high of $78 per barrel in July to about $58 at the time of the cartel’s gathering in Qatar.
Saudi Arabian Oil Minister Ali al-Nuaimi, the group’s most influential member owing to his country’s vast crude reserves, has hinted that Opec will cut again.
Indonesian Energy Minister Purnomo Yusgiantoro said on Friday that Opec is likely to cut its production by one million to 1,5-million barrels per day. — Sapa-AFP