The price of crude oil eased slightly on Tuesday, but remained above $26 a barrel, as the market anticipated a US cold snap and a possible OPEC output cut in the new year.
Benchmark Brent North Sea crude for delivery in February notched down to $26.04 a barrel in early trading deals, from $26.24 at the close on Monday.
In New York, the reference light sweet crude January contract closed out Monday's session at $29.76 a barrel, from $28.87 at the close on Friday.
The sudden support for oil prices has come amid expectations that demand could surge due to a promised US cold snap, while supply remains threatened by fitful Iraqi exports and calls for output cuts from oil ministers from other exporters.
Oil prices, which tumbled by one quarter from the end of November until last Friday, have since turned around, albeit slowly.
"Supportive were forecasts of fresh cold weather in the US northeast by the weekend," noted the GNI brokerage in a research note. The United States is the world's largest consumer of oil.
"Temperatures across much of central and eastern Europe are also expected to turn very cold over the next few days, which could provide some pre-holiday gas oil demand," it added.
On the supply side meanwhile, market players were listening closely to noises from leading ministers of the Organisation of Petroleum Exporting Countries (OPEC), several of whom have called for steep output cuts at a Vienna meeting scheduled for January 17.
Libya, Iran and Kuwait have all called for cuts to stop prices falling further, with some suggesting that one million barrels a day less oil would stop the price slump in its tracks.
Iraq, which has been stalling on exports this month amid a row with the United Nations over its oil-for-food programme, weighed into the debate on Tuesday, urging OPEC to "take measures to counter the current fall in prices by cutting production to soak up the losses of the organisation's member countries."
With question marks hanging over future supply, analysts were watching closely for the latest snapshot of US reserves, which the American Petroleum Institute (API) renders every Tuesday.
Stocks dwindled to 24-year low points earlier in the autumn, but have held firm since, mitigating fears of a supply crunch.—AFP.
©--Agence France Presse.
© 2000 Mena Report (www.menareport.com)
