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Crude drops as OPEC hints no change in strategy

Latest update : 2008-09-10

OPEC members are expected to maintain current production levels at a meeting today despite the ongoing decline in oil prices. At Monday's close in New York, light sweet crude for October delivery fell to $105.19.

Read Business Editor Douglas Herbert's existential take on OPEC's dilemma (apologies to Shakespeare!)

 

World oil prices fell in Asian trade Tuesday amid signs that OPEC will maintain production levels when it meets later in the day, analysts said.
  
New York's main contract, light sweet crude for October delivery, fell 1.15 dollars to 105.19 US dollars per barrel from 106.34 at the close of floor trading Monday in the US.
  
Brent North Sea crude for October delivery fell 1.17 dollars to 102.27 dollars.
  
The Organisation of the Petroleum Exporting Countries (OPEC) is due to meet later Tuesday in Vienna to discuss production targets, and the latest comments from its de facto leader, Saudi Arabia, suggest unchanged output levels.
  
"The market is fairly well balanced," said Saudi Oil Minister Ali al-Nuaimi, as he arrived in Vienna Tuesday for the meeting. "Inventories are in a healthy position, everything is in balance."
  
Experts said the comments boosted expectations of oil price weakness.
  
"If the market is coming to a view that OPEC will not be doing anything at all, then I think you might see oil prices lower and I think that is what's happening right now," said Commonwealth Bank of Australia strategist David Moore.
  
Other OPEC members, including Kuwait and the United Arab Emirates, have called for no change in output levels. But Algeria, Iran, Venezuela and Libya have raised fears of oversupply and suggested the need for a cut.
  
OPEC President and Algerian Energy Minister Chakib Khelil had said on Monday that a production cut by the 13-member group, which pumps about 40 percent of world oil, would be discussed.
  
"Everybody agrees that we will have an oversupply problem of between half a million and one-and-a-half million (barrels per day) by early next year," he said as he arrived in Vienna.
  
OPEC is believed to be producing about a million barrels per day (bpd) more than its official ceiling of 29.67 million bpd, with Saudi Arabia accounting for most of the excess.
  
Some analysts believe Saudi Arabia would be happy to see prices fall below 100 dollars a barrel to help stimulate economic growth.
  
Oil prices have fallen 28 percent since reaching record levels of above 147 dollars in July, hit by worries of waning energy demand as a world economic slowdown takes its toll.
  

Date created : 2008-09-09

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