Oil prices ease after OPEC announces output cut
Oil prices barely reacted to a widely-expected OPEC decision on Wednesday to tighten its taps by 1.5 million barrels a day from the beginning of February in a bid to bolster prices.
Reference Brent North Sea crude for March delivery was selling for $25.02 a barrel, from $25.06 shortly before the decision.Brent closed at $25.52 here on Tuesday.
In New York, the light sweet crude February contract fell to $29.82 a barrel, from $30.29 at the previous close.
The cut, announced by Kuwaiti Oil Minister Sheikh Saud Nasser al-Sabah, represents more than five percent of the output of the Organisation of Petroleum Exporting Countries.
But another energy chief, Abdullah al-Attiyah of Qatar, said that further cuts could be in the pipeline.
"I am happy with this but maybe we will have another cut in March," he said. "We will have to see how the market reacts."
Prices gave a muted response to the announcement because the cut had already been priced into the market, analysts said.
"I don't think anybody is too surprised by this story," GNI trader Robert Laughlin said.
"Initially the market came down, rather like 'buy on the rumor, sell on the fact'," he said. "We have now stabilized a little bit."
Analysts said that the market would now be focusing its attention on other issues such as Iraqi supplies, stocks and the weather.
Iraq has delivered a fitful supply of crude since it blocked exports for 12 days in December over a pricing dispute with the United Nations.
Although the Iraqi oil minister was conspicuously absent from the Vienna meeting, he was nonetheless the talk of the town.
Lawrence Eagles, a market watcher at the GNI brokerage, said: "Iraq is the biggest single factor and that's going to be watched closely alongside global stocks and the weather."
After seeing prices tumble from 10-year high points above 35 dollars a barrel in the autumn, oil-consuming countries are once again concerned that a spike in crude prices will exacerbate the slowdown in the global economy.
Any further disruptions to Iraq's exports are therefore likely to add further support to prices, analysts say.—AFP.
©--Agence France Presse.
© 2001 Mena Report (www.menareport.com)