Oil prices marked time on Wednesday as the market digested signs that US reserves might at last be starting to increase, but fretted about the prospects of a suspension of Iraqi exports.
A barrel of Brent North Sea benchmark crude for January delivery peaked at 32.45 dollars before drifting back to 32.21 dollars, close to its overnight level of 32.19.
In New York meanwhile, the January light sweet crude contract slipped slightly to 34.1 dollars a barrel.
Analysts said prices had fallen back from recent high points well above 33 dollars a barrel because of signs that US inventories were increasing.
Persistently low US stock levels have been a prime factor in driving prices to 10-year high points this autumn, as the market fears supply may not be able to meet demand as the winter bites.
But the American Petroleum Institute reported late on Tuesday that crude stocks rose by 1.8 million barrels to 292.5 million last week. Crude stocks remain more than eight million barrels lower than at the same time last year.
The Department of Energy said crude stocks were flat at 290.1 million barrels, but it was the API data that moved the market.
"The market fell quite steeply overnight after the release of the API figures in the states," said Prudential Bache trader Christopher Bellew, adding that milder weather in the United States could also continue to press down on prices.
"I wouldn't be surprised to see prices fall again because of the mild weather ... particularly once we begin to feel a pattern of stock builds because of the higher OPEC output," Bellew said.
The Organisation of Petroleum Exporting Countries has raised production by 1.3 million barrels a day since September in a bid to cool a feverish market, oil which Bellew said "should just be beginning to hit western countries".
But fears of a rude interruption to Iraqi supplies remain rife in the market, because Baghdad is believed to be trying to break the sanctions regime against it by ordering customers to flout the terms of the UN oil-for-food programme.
Iraq has reportedly called on its customers to pay a 0.50-dollar premium over the official purchase price from December 1, and to pay it into an account not controlled by the United Nations.
The United Nations said on Tuesday that it had rejected Iraq's proposed pricing formula for sales of its oil under UN supervision in December.
Iraq exports 2.3 million barrels of oil a day, and a prolonged suspension of such volumes would dramatically affect the tight market -- LONDON (AFP)
© 2000 Al Bawaba (www.albawaba.com)
