Oil prices fell again on Monday, adding to last week’s 10% slump, on continued speculation that the producers’ cartel Opec would agree to increase output when it meets on Wednesday in Abu Dhabi.
United States light crude futures fell by more than a dollar a barrel in busy trading to about $87,50 a barrel — almost $12 a barrel lower than the peak of $99,29 set two weeks ago but still well above the $70 a barrel it was trading at in August.
Earlier in the day, though, it had traded up to almost $90 a barrel, such is the uncertainty gripping the market. There is also nervousness about the prospects of a downturn in many large economies, which would dent demand for oil.
In London, Brent traded down 75 cents at $87,50, having pushed above $89 early in the trading session.
David Moore, a commodity strategist with the Commonwealth Bank of Australia, said: ”With oil prices having since receded and comments from some Opec officials quite noncommittal on what Opec may or may not do, I think maybe there’s just a bit more caution coming into the market.”
In recent days, several Opec ministers have said their countries are ready to boost output to bring down high oil prices. Analysts speculate that the cartel, which produces about 40% of the world’s oil, will raise production by between 500 000 and one million barrels a day.
But Venezuela’s Oil Minister said on Sunday that his country would oppose any increase in crude oil output quotas. ”We don’t see a need to increase oil production … The market is well supplied,” said Rafael RamÃƒÂrez, repeating a view from within Opec that prices are being driven up by speculators in Western countries rather than by a physical shortage of oil.
Jim Ritterbusch, of Ritterbusch Associates, an oil trading consultancy in the US, said Opec faced the problem that if it did not increase output, as the market has expected and priced in, prices could bounce up once again.
But Saudi Arabia, Opec’s biggest producer, gave no indication that it was in the mood to pump more oil. – Guardian Unlimited Ã‚