Brent crude oil slipped below the key level of 100 dollars a barrel Tuesday for the first time since April 2, sinking as low as 99.30 dollars in London. The sharp decline in Brent North Sea crude for October delivery came after Opec's chief signalled the cartel would keep its production ceiling unchanged, despite sinking prices and slowing economic growth.
"We are going to stay with the level of production where we are now," Opec president and Algerian Energy Minister Chakib Khelil told reporters ahead of a formal announcement later in the day. New York's main contract, light sweet crude for October, plunged 3.08 dollars to close at 103.26 dollars a barrel.
Oil prices peaked at record high levels above 147 dollars in July but since have trended downward to the psychological barrier of 100 dollars, first crossed in early January. In early trade cil prices slumped close to 101 dollars a barrel Tuesday, their lowest reading since the start of April, with Opec set to hold output at current levels.
Brent North Sea crude for delivery in October dropped as low as 101.27 dollars a barrel. It later stood at 101.75 dollars, a loss of 1.69 dollars from Monday's close. New York's main contract, light sweet crude for October, shed 2.16 dollars to 104.18 dollars a barrel. It had fallen at one point to 104.09 dollars.
"Market participants are focusing on the all important Opec meeting in Vienna," said Sucden analyst Andrey Kryuchenkov. Oil prices peaked above 147 dollars in July this year but now threaten to plunge below 100 dollars amid faltering global economic growth and weakening demand for oil. Opec's meeting in the Austrian capital, which is not expected to begin until around 2100 local time (1900 GMT) because of fasting for the Muslim holy month of Ramazan, is the group's first official gathering since March.
Some analysts had suggested Opec would cut its excess output, estimated at about one million barrels per day above its official production quota of 29.67 million bpd. They also believe that Saudi Arabia - the world's biggest producer of crude oil - would be happy to see prices fall below 100 dollars to help stimulate global economic growth which has slowed sharply in recent months.
Crude futures had closed mixed on Monday as the market focused on the looming Opec meet and as Hurricane Ike headed toward energy installations in the Gulf of Mexico. Hurricane-force gusts lashed Cuba's crumbling and crowded capital Havana on Tuesday, as Ike brought pounding rain and towering waves across the country leaving four people dead.
The storm ploughed across the island as a diminished category one storm on the five-level Saffir-Simpson scale but was expected to regain strength over western Cuba and get even stronger when it reaches the Gulf of Mexico by Wednesday.