Oil falls again as OPEC dodges demand slump
chron.com
LONDON -- Oil prices fell today after a meeting of OPEC's top two producers, Saudi Arabia and Iran, failed to produce concrete plans for an output cut despite slumping demand for oil.
Traders also took fright from U.S. data showing the biggest demand drop in six-and-a-half years in September.
European benchmark Brent crude oil fell 31 cents to $21.05 per barrel by 1500 GMT, having begun the day at a high of $21.70.
U.S. crude futures shed five cents to $21.95 per barrel in New York, extending a decline that has slashed a quarter off the price of a barrel in a month.
Saudi Oil Minister Ali al-Naimi and Iran's Bijan Zanganeh, after holding unexpected talks in Riyadh on Wednesday, called on producers outside the cartel for help in lifting prices.
Naimi and Zanganeh said an output cut of up to a million barrels per day was one of several options being considered.
But Venezuelan President Hugo Chavez, on a visit to OPEC's headquarters in Vienna, said further reductions in OPEC supply would be useless if extra oil continues to flow from other producers, such as Russia where exports are rising fast.
"It would be useless for OPEC to reduce production if non-OPEC countries keep producing (more) oil," Chavez told reporters after meeting diplomats and OPEC officials.
OPEC's oil export basket price stood at a two-year low of $19.48 per barrel on Tuesday, well below its $22-$28 per barrel target range.
Gary Ross, CEO of PIRA Energy Group in New York, said OPEC appeared to be buying time before an inevitable cut in its production.
"This is clearly a sign of weakness. By calling for non-OPEC support they are showing they don't know what to do," he said.
"The world economy is moving towards recession and OPEC is chasing a decline in demand," he added.
Prices began the day much higher after industry data showed an unexpectedly large seven million barrel drop in U.S. crude oil inventories last week. But the effect wore off after U.S. government data showed the stock draw was smaller than that, at only four million barrels.
Selling pressure intensified when the American Petroleum Insitute revealed that U.S. demand for oil in September fell 3.7 percent from a year ago to 19.2 million barrels per day, the largest year-on-year decline in six-an-a-half years.
The Organization of the Petroleum Exporting Countries, which controls two thirds of world exports, is due to meet again on Nov. 14.
It has already slashed its production ceiling three times this year to cater for slower-than-expected demand growth, but compliance has worsened with every cut. |
