Oil prices in London IPE lost ground on Wednesday due to hesitation in OPEC over the cartel’s next move on production.
London Brent blend last traded 28 cents weaker at $25.83 a barrel. US light crude dipped 34 cents in electronic trade to $28.08 after a 62-cent slide yesterday, according to a report from The Economic Times.
Dealers have grown frustrated with apparently contradictory Opec statements on whether the cartel will decide to cut production at its ministerial meeting in Vienna on March 16.
Opec officials appear uncertain now whether another round of supply cuts will be required in March to keep prices afloat at their target of $25 a barrel for a basket of cartel cruds, which on Monday stood at $24.42.
With Opec’s January output cuts only now being felt in the market, cartel officials are having difficulty in assessing the outlook for the second quarter when demand slows after the northern hemisphere winter.
Opec secretary-general Ali Rodriguez said yesterday if oil prices remained steady, producers would not need to slice export quotas.
“This appears to backtrack from the organization’s stance of last week when the questions was not `if’ but `how much?’” said Lawrence Eagles, analyst at GNI Brokers.
A week ago it looked as if Opec was preparing to deepen the 1.5 million barrels daily in output cuts agreed in January, because it was worried prices could fall in the second quarter.
That lent support to prices that had been under pressure since mid-January because of worries about the impact of a slowing world economy on petroleum demand growth.
Opec will want to wait for March data from the US to measure the economic slowdown in the world’s biggest oil consuming nation.
It also will look to the International Energy Agency for its revised monthly outlook for oil markets in the week before the March 16 Opec ministers meeting.
Oil dealers today were also waiting to see if last week’s heavy draw in US crude stocks would be reversed. Crude inventories fell heavily after fog delayed shipments into US Gulf coast refineries.
Industry body the American Petroleum Institute reports stock levels for the week to February 23 after US futures markets close today.
© 2001 Mena Report (www.menareport.com)
