Oil prices find support above $25 a barrel
Oil prices stuck above $25 a barrel in morning trade on Friday as traders fretted about the potential effects of Wednesday's OPEC output cut and the prospect of fitful supplies from Iraq.
Benchmark Brent North Sea oil for March delivery was selling for $25.65 a barrel, from $25.62 at the close on Thursday.
In New York, the light sweet crude February contract climbed 80 cents to $30.45 a barrel overnight.
Prices found support from speculation that US President-elect George W. Bush might take a hard line against Iraq, which analysts said could provoke Baghdad to impose a new oil embargo.
Iraq has delivered a significantly reduced supply of crude in dribs and drabs since it blocked exports in early December over a pricing dispute with the United Nations.
Analysts warn that crude stocks risk being drained down again if Iraq continues to hold back supplies once the Organization of Petroleum Exporting Countries' five-percent output cut kicks in at the beginning of February.
The International Energy Agency estimated on Friday that OPEC production fell to 27.86 million barrels a day in December from 29.54 million the previous month, largely owing to the 12-day Iraqi embargo.
It also forecast that worldwide demand for oil would slow to 75.6 million barrels a day in 2001 from 77.3 million this year because of a global economic slowdown.
The latest official figures on US stocks meanwhile from the US Department of Energy on Thursday showed a fall of one million barrels a day last week, offset somewhat by a large increase in distillate inventories.
These contradicted unofficial but closely watched figures from the American Petroleum Institute the previous day showing an increase in crude of two million barrels, but with a large decrease in oil-based products.
Stocks would be put under further pressure if OPEC tightens its taps again when it meets in March, analysts warn.
Kuwaiti oil minister Saoud Nasser Al-Sabah said Thursday that the oil-exporting group would reduce output quotas again at the March meeting if the OPEC basket crude price persists below $22 a barrel for more than 10 days under the group's informal price stabilization mechanism.
Referring to the mechanism, Al-Sabah told journalists in Kuwait: "We will activate it if prices slide under the stipulated range," the OPECNA news agency reported.
But on Thursday, the price of the OPEC basket of seven crudes worldwide stood at $23.93 a barrel, up from $23.66 a barrel on Wednesday, OPECNA said.—AFP.
©--Agence France Presse.
© 2001 Mena Report (www.menareport.com)