OPEC tries to stabilize oil prices
US OIL prices fell further yesterday on continued profit-taking as producer-group OPEC promised production increases in the coming months. US light crude fell to its lowest point in more than a month, to US$41.30 a barrel, more than $8 below a record high earlier this month. Traders put it down to hedge funds unwinding their speculative long positions. After striking the days low, US crude recouped some of the losses, and at midday was at $41.93, down $1.25. Brent crude trade on London’s International Petroleum Exchange was shut for a the bank holiday. Despite last week’s slide, prices are still about a third higher than at the end of 2003 as producers pump close to full tilt to match soaring demand. The head of the OPEC producers cartel said yesterday that the group, which controls more than half of world exports, aimed to increase spare output capacity by about a million bpd in the next few months in an effort to bring down sky-high prices. OPEC is estimated to be pumping close to 30 million barrels per day (bpd), its highest level since 1979, in an effort to dampen this years price rally. But only OPEC’s Saudi Arabia has any significant spare capacity within the 11-member producers cartel, which is due to meet on 15 September in Vienna to review output policy, informs Scotsman. According to Telegraph, oil prices dropped by more than a dollar yesterday as traders bet that producers' cartel Opec would increase its output in the coming months. The benchmark crude price in the US, light sweet crude, dropped $1.25 to $41.93 a barrel in late trading - the first time it has dipped below $42 for more than a month. Many traders had expected oil prices to jump again yesterday, after an attack on pipelines in southern Iraq , but analysts said the markets were relieved that the radical cleric Moqtada al-Sadr had ordered a nationwide ceasefire. London's International Petroleum Exchange was closed yesterday for the bank holiday, but traders said they expected prices to start lower today. Fimat USA analyst Mike Fitzpatrick said: "There's the feeling security will definitely improve down the road." US crude prices peaked at just under $50 on August 20, as traders fretted about the security of oil supply and the prospect that demand from China would continue to increase. Despite the attacks, Iraqi oil officials said they expect exports to remain at about 1.5m barrels per day. The price of oil has fallen in New York after Opec president Purnomo Yusgiantoro said that the oil cartel's members were increasing production. He warned, however, that prices will only stay low if global conflicts are resolved, easing market jitters. It also emerged that a bomb blast in Iraq will not affect supply. Many investors are betting that prices are unlikely to hit record levels again in coming weeks and are looking to pocket some profits. Mr Yusgiantoro said that there has to be a big reduction "in geopolitical tensions" for prices to stabilize, reports BBCNews.
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