(AFP) – Nov 12, 2007
NEW YORK (AFP) — Oil prices fell Monday after Saudi Arabia and Kuwait hinted of an OPEC output hike ahead of the cartel's meeting this weekend and investors continued to worry about slowing economic conditions.
New York's main contract, light sweet crude for December delivery, shed 1.70 dollars to close at 94.62 dollars a barrel.
In London, Brent North Sea crude for December delivery slumped 1.20 dollars to settle at 91.98 dollars.
Crude futures, which have surged to record highs in recent weeks, retreated a day after the oil ministers of Saudi Arabia and Kuwait said the Organization of the Petroleum Exporting Countries would consider the possibility of raising production if needed.
"Crude futures were down following comments from Saudi Oil Minister Ali al-Nuaimi, OPEC's most influential voice," Sucden analyst Michael Davies said Monday.
Nuaimi had told reporters during a short visit to Kuwait that talk of a hike in output was premature. But he added: "When OPEC meets, we will discuss this issue."
Kuwait's acting oil minister Mohammad al-Olaim said the cartel would be willing to increase output "if there is a need to raise production in accordance with market parameters."
"During the Abu Dhabi conference, we will assess the market situation and the stocks and talk about if there is a need to raise output," Olaim said.
OPEC has scheduled a summit of its 13 member countries in Riyadh, Saudi Arabia, on Saturday and Sunday. Ministers are also due to hold a special meeting on December 5 in Abu Dhabi, United Arab Emirates.
After an OPEC meeting on September 11, when it decided to increase output by 500,000 barrels a day, effective November 1, the cartel has watched prices climb nearly 20 dollars without saying whether it would act to further increase supply.
Oil futures have been nearing the 100-dollar-a-barrel mark, racing Wednesday to all-time highs of 98.62 dollars in New York and 95.19 dollars in London.
Victor Shum, an analyst with energy consultancy Purvin and Gertz, noted that OPEC had been "unusually quiet" during the recent record-breaking run for oil prices.
"So any talk of action out of OPEC would be calming news," he added.
For John Kilduff of MF Global, the OPEC factor was not as important for crude prices as an overall downturn in sentiment on equities markets due to credit fears.
"Ascribing the price decline to Saudi production intentions is a bit specious in our view," Kilduff said.
"The equity market malaise seems to have returned in full force, as liquidity concerns mount, once again, related to the massive write downs of asset-backed fixed income portfolios."
Recent comments by US Federal Reserve chairman Ben Bernanke warning of a US economic slowdown in early 2008, which some investors saw as signaling lower demand in the world's largest energy consumer, also weighed on prices.
"With the cautionary comments coming last week from the US Federal Reserve about the fate of the US economy, that has provided a reason for traders to pull back the pricing," said Purvin and Gertz's Shum.
Despite Monday's price retreat, the market remains "in a quest to hit that prize of 100 dollars a barrel," said Phil Flynn, an analyst at Alaron Trading.
According to analysts, the expiration of options Tuesday and the December contract in New York Friday would heighten market volatility this week.
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