Despite a slight oil price hike, the market seemed to hold its breath Monday, awaiting the latest US oil reserve figures and an anticipated production increase by OPEC.
The price per barrel of light sweet crude for December delivery rose 81 cents here Monday, settling at 33.76 dollars, up from Friday's closing price of 32.95 dollars.
Brent North Sea crude for December delivery sold for 31.45 dollars a barrel in London Monday, slightly below its closing price of 31.62 dollars on Friday.
Though investors remained nervous about the ongoing violence between Israelis and Palestinians in the Middle East and the impact this could have on Arab oil supplies, the market was expecting output from key producers to be increased rather than cut in the short term.
Prices were sent skyrocketing to 10-year highs above 35 dollars earlier in the month amid concerns that a full-scale regional crisis could spark an Arab oil embargo.
But Kuwaiti and Saudi Arabian officials said on Friday that using oil as a weapon in the struggle against Israel would not be in Arab nations' best interest.
The market is "taking them at their word" for the moment, said Chris Schachte, an analyst with Atlanta-based GSC Energy.
Analysts from London-based brokerage GNI however warned investors on Monday to be cautious in the coming weeks, as the unrest in the Middle East seems destined to continue.
An output increase is anticipated because the Organization of Petroleum Exporting Countries' price mechanism provides for an increase of 500,000 barrels per day if the OPEC basket price remains above 28 dollars a barrel for 20 consecutive working days – NEW YORK (AFP)
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