fell $2.29 to $37.38 a barrel.A resumption of oil flows through Iraq’s northern pipeline to the Turkish port of Ceyhan after a 12-day halt encouraged selling. Shippers said the flows of Kirkuk crude resumed at about 450,000 barrels per day (bpd).
OPEC ministers meeting in Cairo Friday said they would implement a cut to output of just over 1 million bpd on Jan. 1 to bring production in line with the group’s official limit of 27 million bpd. The ministers also decided to meet again on Jan. 30 to discuss whether further cuts were needed.
The Organization of the Petroleum Exporting Countries, which controls about 40 percent of the world’s oil, has been producing at its highest level in 25 years to meet rising demand in China and fuel strong world economic growth.
Excess supply above formal cartel quota limits has swelled crude inventories to about 5 percent above year-ago levels in the United States, the world’s largest energy consumer.
«Markets appear to want to test OPEC’s apparent resolve to defend prices at $33 for the basket (of OPEC crudes). And promises to cut out ’over-production’ may not deter them,» said Jan Stuart of brokers Fimat.
Crude prices are still up about 30 percent for the year, but a fall in the dollar’s value has eroded OPEC’s purchasing power from non-dollar economies.
Consumer nations have urged OPEC not to curb supplies, saying oil stocks need to rebuild to calm volatile prices and underpin economic growth.
Outgoing U.S. Energy Secretary Spencer Abraham declined comment directly on OPEC decision’s, except to say that «we should let the market work and not try to artificially set a production level.»
President George W. Bush on Friday nominated Deputy Treasury Secretary Sam Bodman to replace Abraham as Energy Secretary for Bush’s second term.
The unexpected choice of a low-profile Treasury official to the energy post signals the Bush administration wants an experienced administrator to run the department, leaving policymaking to the White House, experts said.
Bodman will have to deal with high energy prices and help the Bush administration win congressional approval to allow oil drilling in the Arctic National Wildlife Refuge.
Forecasts for a bout of frigid weather in the United States next week may ramp up demand for winter heating oil and test thin stockpile levels.
U.S. distillate stocks are running 13 percent below year-ago levels, according to government data this week.
By Richard Valdmanis
Click / START NOW! / for opening the new account at Bet On Markets. |
See also:
