Oil prices fell to $71 a barrel Tuesday as investors expected OPEC to try to halt a three-month slide in prices by cutting production quotas by at least 1 million barrels a day.
At the same time, gains by the U.S. dollar against the euro were putting the brakes on any gains in oil prices.
"The general trend is still of uncertainty," said analyst Olivier Jakob of Petromatrix in Switzerland.
By midday in Europe, light, sweet crude for November delivery was down $2.76 to $71.49 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, it rose as high as $75.69. The contract gained overnight $2.40 to settle at $74.25.
Prices closed as low as $69.85 a barrel last week, down 53 % from a record $147.27 on July 11.
In London, November Brent crude was down 62 cents to $71.41 a barrel on the ICE Futures exchange.
"It definitely looks like a cut is in the cards," said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore. "A cut of at least 1 million has been priced in. A cut much larger than 1 million could move prices higher."
OPEC meeting
The Organization of Petroleum Exporting Countries, which accounts for about 40% of global oil supply, plans to announce an output reduction at a meeting on Friday at its headquarters in Vienna, said the group's president, Chakib Khelil.
Khelil has said OPEC may cut output again at a meeting in December, and that the group considers the oil market oversupplied by about 2 million barrels a day.
Investors are also keeping a close eye on whether non-OPEC producers, such as Russia, will reduce supply as analysts lower price expectations for next year. Deutsche Bank on Monday cut its 2009 oil price forecast to $60 a barrel from $92 and predicted $57.50 for 2010.
"Producers are getting concerned about this downward spiral in pricing since the summer," Shum said. "Some governments have based their budgets higher than current prices."
Rising global stock markets have also supported prices this week.
Federal Reserve Chairman Ben Bernanke told the House Budget Committee on Monday that a fresh round of government measures might help ease the country's economic weakness. There were also signs of a reviving credit market as bank-to-bank lending rates eased further.
Stock indexes across Asia rose Tuesday, with Japan's benchmark Nikkei 225 stock average up 3.3 %. The Dow Jones industrials average rose 4.7 `% Monday.
"Lately oil has traded in sync with equities as traders look to equity markets for indications of the macro-economic outlook," Shum said.
Dollar gains
On the negative side for oil, the dollar continued to rise against the euro and the British pound, a trend which can draw investors out of commodities.
By midday in Europe, the euro was down to $1.3240 from $1.3323 in the previous session, while the British pound bought $1.7069 compared with $1.7121 late Monday in New York.
In other Nymex trading, heating oil futures rose 1.01 cents to $2.22 a gallon, while gasoline prices lost 46 cents to $1.7155 a gallon. Natural gas for November delivery gained 2.4 cents to $6.765 per 1,000 cubic feet.
Iran's oil minister says the Islamic republic, Russia and Qatar discussed the formation of an OPEC-style cartel of gas exporting countries.
Gas exporters
Iranian Oil Minister Gholam Hossein Nozari says that the top three countries with natural gas reserves will "seriously pursue the formation of an organization of gas exporting countries."
Nozari spoke on state TV Tuesday after a joint meeting with his Qatari counterpart Abdulla Bin Hamad al-Attiya and the head of Russia's Gazprom Alexei Miller.
He said the three parties decided to further discuss the cartel at the next meeting of their foreign ministers.
The idea of formation of the gas cartel was first raised by Iran when then-president of Russia Vladimir Putin visited Tehran in 2007.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment