Oil price weakens as opposition dwindles to Saudi promise to pump more
LONDON, July 10 (AFP) - Crude prices weakened slightly in London trade Monday after comments over the weekend suggested OPEC is modifying its opposition to "unilateral" promises from Saudi Arabia to raise oil production.
In London, benchmark Brent crude for August delivery slipped 23 cents to 29.47 dollars a barrel.
At the end of last week in New York, light sweet crude for August delivery closed at 30.28 dollars a barrel, 29 cents higher.
The first significant falls in the oil price for weeks were triggered last week by comments from the Saudi Arabian Oil Minister Ali al-Nuaimi stating his commitment to lower oil prices and promising to pump an extra 500,000 barrels per day unless prices fell of their own accord.
The pledge from the world's largest oil producer was initially slammed as "unilateral" by fellow members of the Organisation of Petroleum Exporting Countries (OPEC).
GNI Research brokerage said in its daily briefing note on Monday that OPEC members appeared to be modifying their opposition to more oil.
Venezuelan Energy Minister Ali Rodriguez, holder of OPEC's revolving presidency, is now on a tour of member states of the oil producers' club, which will include talks with al-Nuaimi to discuss the mooted production increase.
Speaking in Algiers at the weekend, Rodriguez dismissed talk of individual member nations unilaterally increasing oil output as "pure speculation".
"Decisions are taken by consensus and after agreement by all members of the organisation," he was quoted as saying by the official Algerian Press Service.
However, although Rodriguez said that OPEC would stick to its output decision taken on June 21 in Vienna, he hinted that the body would be willing to raise production if needed, once market conditions have been studied.
"There is an accord that was agreed by OPEC ministers on June 21. This accord only came into force on July 1. It must show its worth on the ground. After that we can plan follow-ups and answers to give to the oil market," Rodriguez said.
However, GNI's daily note said: "There is a limit to market patience ... it is now a week since the Saudi Arabian oil minister pledged more oil 'within days' and the market will get frustrated if it has to wait much longer."
At its June meeting, the Organisation of Petroleum Exporting Countries agreed on a "compromise" output increase of 708,000 barrels a day beginning July 1.
The figure was less than the million barrels per day the United States was said to want and Saudi Arabia had been considered eager to provide in the run up to the decision.
Persuading OPEC as a whole to agree to a larger increase was complicated by the fact that, apart from Saudi Arabia, only Kuwait and the United Arab Emirates have significant spare capacity.
Also at the weekend, the Group of Seven industrialised nations meeting in Fukuoka, Japan, voiced concern that high fuel costs present a risk to world growth.
French Finance Minister Laurent Fabius said: "If this doesn't come down, (it) could undermine all our good work."
© 2000 Mena Report (www.menareport.com)