The price of oil drifted lower on Tuesday despite growing signs that the Organisation of Petroleum Exporting Countries (OPEC) may be planning another output cutback.
A barrel of Brent North Sea crude for April delivery fell back six cents to $27.25 in early trading here. The New York market was closed on Monday, and March light sweet crude futures remained at $29.13 a barrel.
London futures rose slightly on Monday after the US-British raids on Iraqi sites near Baghdad that prompted mild concerns of a regional stand-off drawing in other Arab oil exporters.
On Tuesday the focus was switching to OPEC amid signs that the 11-nation organisation could cut decide next month to cut output again, following a steep five-percent cutback that came into effect this month.
OPEC Secretary General Ali Rodriguez of Venezuela has already hinted that members could support cuts of up to one million barrels a day - just under four percent of current total output.
The Wall Street Journal reported on Tuesday that OPEC kingpin Saudi Arabia was prepared to support a further squeeze to underpin prices.
But dealers said the reports were barely affecting market trading. "People are just sort of speculating that they may do something but there is nothing concrete at the moment," said one London dealer at the International Petroleum Exchange (IPE).
OPEC wants to ensure that prices, which have fallen more than 20 percent from last year's high point, do not tumble further as the northern hemisphere enters the spring season when demand traditionally ebbs.
OPEC's own basket price of seven world cruds, which it uses as a guide for production policy, stood at $25.28 a barrel on Monday from $24.90 on Friday. OPEC has stated that a range of $22-28 is acceptable.
The London-based Centre for Global Energy Studies (CGES) said on Monday there was a 50/50 chance of a cut when ministers gather in Vienna on March 16. But it cautioned against such a move.
"If OPEC acts to keep prices high, then demand growth will falter and OPEC will enter a vicious circle of successive output cuts to defend an unsustainable price," the CGES said.—AFP.
©--Agence France Presse 2001.
© 2001 Mena Report (www.menareport.com)
