The price of oil remained under pressure Thursday after slumping to its lowest level of the year in the previous session amid fears that supply will soon start to outstrip demand.
A barrel of Brent North Sea crude sold for $24.44 a barrel on Thursday afternoon, little changed from its opening level.
Wednesday's closing level of $23.93 was the lowest since December. In New York, the light sweet crude April contract fell 1.18 dollars to $26.41 on Wednesday.
Prices have come under pressure because of predictions that the global economic slowdown will impact on energy demand. The International Energy Agency (IEA) revised down its forecast for demand growth further on Wednesday.
Slumping equity markets meanwhile point to the gloomy corporate mood, which could impact oil demand further.
"Bearishness is spreading to equity markets around the world and with US citizens holding a massive part of private savings in the stock market, this slump has the potential to exacerbate the current economic slowdown," said Lawrence Eagles, an analyst with the GNI brokerage.
Against this backdrop, ministers from the Organisation of Petroleum Exporting Countries (OPEC) are meeting in Vienna to decide on the kind of output cutback that could help rein in supply and underpin prices.
Most economists had expected OPEC to cut production by up to one million barrels a day at a Friday meeting in Vienna, but OPEC president Chakib Khelil said ministers were discussing cuts of "up to 1.5" million barrels a day.
After enjoying billion-dollar windfall profits last year from surging crude prices, OPEC countries now get jittery whenever prices fall below $25 a barrel.
For many, the 10-dollar-a-barrel oil in 1998/99 remains a painful reminder of what happens when too much supply swamps the market.
OPEC's own basket price of seven crudes, which it uses to help set production policy, stood at $23.55 a barrel on Wednesday, down from 24.08 dollars on Tuesday, the Vienna-based OPECNA agency said.—AFP.
©--Agence France Presse 2001.
© 2001 Mena Report (www.menareport.com)