The price of oil fell further on Friday morning, dipping well below 27 dollars a barrel amid expectations that Iraqi exports would soon flow again because a deal with the United Nations could be in the offing.
A barrel of Brent North Sea benchmark crude for January delivery fell to 26.86 dollars, from 27.47 at the close on Thursday. In New York overnight, the January light sweet crude contract fell 50 cents to 29.35 dollars a barrel.
"There is a suggestion (...) that the UN is close to agreeing the latest December pricing proposal from Iraq," said Prudential Bache market watcher Tony Machacek.
"So the suggestion is that Iraq may be close to re-exporting again," he added. "That's really the major development overnight; that's why we are coming off heavily this morning."
Oil prices have tumbled almost 20 percent in the past two weeks as the market has woken up to the notion that there will be enough oil swilling around on international markets during the northern hemisphere winter to meet demand.
Even cold snaps in the United States have not boosted prices much, and the prospect of 2.3 million barrels a day of Iraqi exports returning to the market has compounded the conviction of abundant supply.
"Exports could resume today (Friday) after effectively a one-week halt," said the GNI brokerage in a research note. "Indeed the pace of exports should be high as Iraq has been busy pumping oil into storage at the ports."
The recent slump in prices has brought the OPEC basket price back within the 22-28 dollar range which the oil-exporter organization favors.
The Organization of Petroleum Exporting Countries is now under no pressure to countenance output increases, and has made it clear that output cuts are the more likely next move -- LONDON (AFP)
© 2000 Al Bawaba (www.albawaba.com)
