Oil prices fell slightly on Tuesday, but remained underpinned by continuing wintry conditions in the United States and growing expectations of a cut in output next week by the Organisation of Petroleum Exporting Countries (OPEC).
A barrel of Brent North Sea crude for April delivery dipped to $26.46 from $26.71 overnight. In New York on Tuesday, light sweet crude for April delivery fell 20 cents to $28.40.
Dealers said that market players were reluctant to sell, particularly when watching snow fall in New York. The inclement weather hitting the US eastern seaboard has led to expectations of stronger demand and hence higher prices.
The market will watch closely for estimates of US crude stocks last week, due to be published by the American Petroleum Institute (API) later Tuesday, to see how buoyant reserves were before the latest cold snap.
Stocks will come under additional pressure further down the line if OPEC decides at a March 16 meeting to cut production again, after reducing output by five percent in February. Many are expecting a cut following recent market whispers that OPEC kingpin Saudi Arabia believes it to be necessary.
"The question now is by how much OPEC will cut," said GNI brokerage analyst Lawrence Eagles. OPEC is fretting that prices are currently 25 percent below last year's high-water mark above $35 a barrel.
OPEC's own basket price for seven world crudes, which it uses as a guideline for production policy, stood at $24.52 a barrel on Monday from $24.02 on Friday, the OPECNA agency reported.
"Given their paranoia over the OPEC basket dropping below $25 barrel, we would expect a few ideas on the size of cuts to be fed to the market in the coming days to gauge market reaction," Eagles said. – (AFP)
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)