Oil prices rose on Monday, pulling out of a steep slide from a record high earlier this months amid signs Opec will reject calls from consumer nations for a hike in output. Several members of the cartel have said they believe the world oil market is well-supplied and that there is no need for the group to open up the spigots when it meets in Abu Dhabi on Wednesday.
US crude settled up 60 cents to $89.31 a barrel, bouncing off a five-week low of $87.14 hit earlier in the day. London Brent crude traded up $1.54 to $89.80. Prices remain down more than 10 percent from the November 21 peak of 99.29 a barrel as widespread worries the weakening US economy could cut into world energy demand stemmed crude's record rally.
But the slump in price and the dimming demand outlook has also made Opec more reluctant to add barrels. "In the face of some potential declining economic activity, it wouldn't make sense (for Opec) to move," said Eric Kalamaras, head of energy research at Wachovia Bank.
Consuming nations have urged Opec to pump more oil to help temper shrinking inventories ahead of the Northern Hemisphere winter and to stem prices. But Opec ministers, who agreed this year to hike output by 500,000 barrels per day effective November 1, insist oil's surge to record highs had been driven by speculators and not by a shortfall in supplies.
"There is absolutely ample supply," said Ali al-Naimi, Saudi Arabia's influential oil minister. Other members of the group have said Opec should not, or is unlikely to, further boost output in Abu Dhabi, including Libya, Venezuela, Qatar, and Ecuador.
"I do not think the market needs any more oil," said Shokri Ghanem, head of Libya's Opec delegation. A Reuters poll of 23 banks, traders and funds on Monday showed 12 participants did not expect Opec to raise output. Late last week, a similar poll had 18 out of 24 participants expecting an increase of around 500,000 barrels per day.
"The market's been oversold and due for a correction and is getting some support from the expectation that Opec will keep supply steady or only boost a token amount," said Eric Wittenauer, analyst at A.G. Edwards in St. Louis.
Adding support, Opec's November production levels, excluding Iran and Angola, failed to reach the target set in September, when the cartel agreed to increase supplies by 500,000 bpd, a Reuters survey found.
Oil prices had been under pressure earlier in the day amid the faster-than-expected restart of the giant Canada-US Enbridge pipeline following a fire last week. Enbridge said Monday the last of four pipelines impacted by the explosion had restarted.
SINGAPORE: Oil bounced back above $89 a barrel on Monday as traders bet last week's nearly $10 selloff was overdone, and might turn the tides against an expected increase in Opec output when the cartel meets later this week. US light, sweet crude for January delivery rose as high as $89.84 a barrel in Globex electronic trading.
Comments
Comments are closed.