Oil eases as funds take profits from bull run
Oil eases as funds take profits from bull run
Reuters, London
Oil prices eased on Monday as speculative hedge funds took
profits from recent strong gains made on supply concerns for the
northern winter and violence in the Middle East.
Benchmark Brent crude dropped 51 U.S. cents to US$29.05 a
barrel in London and U.S. light crude for December delivery fell
67 U.S. cents to $31.70 a barrel.
Heavy buying by investment funds has helped push prices up 12
percent this month and analysts said speculators would now look
to take profits. Since the Iraq war U.S. crude has held strong
above $25 a barrel, but has repeatedly failed to break above the
$33 a barrel level.
"This market does now look vulnerable to fund liquidation and
this is probably what we are seeing," analysts at Barclays
Capital bank said in a report.
Oil prices have risen by $4 since the deal in September by the
Organization of the Petroleum Exporting Countries to cut
production by 3.5 percent in November.
OPEC meets next on December 4 and some analysts have said that
the cartel will need to cut supply again to offset rising output
from Russia and Iraq.
Venezuela said on Monday that despite the current price
strength OPEC would not raise production.
"We maintain our position to cut production if it is
necessary...or to keep it stable. But we are not thinking about
increasing production," Venezuela Energy Minister Rafael Ramirez
said.
Shipping brokers say heavy tanker loadings from the Middle
East suggest OPEC has not implemented existing cutbacks in full,
noting extra bookings by top world exporter Saudi Arabia.
Suicide bombs in Saudi Arabia and Iraq have bolstered concern
over supply from the Middle East, which pumps a third of the
world's oil.
A unit of militant group Al-Qaeda claimed responsibility for
Saturday's blasts at two Turkish synagogues that killed at least
23 people. The unit also threatened the United States, Australia,
Japan, Italy and Britain, as well as their Arab allies, with more
bombings.
"The geopolitical backdrop is undoubtedly another key factor
in keeping prices firm," said Man Financial in a research note.
"Every day we are seeing more turmoil on the Middle East and this
past weekend the grim news was worse than usual."
A U.S. government report showing crude and heating oil stocks
falling ahead of winter bolstered last week's gains as refined
oil product stocks are below comfortable levels in the United
States, the world's biggest oil consumer.
Rapid fuel demand growth in China has also strengthened
international prices, as has Iraq's failure to return to pre-war
export levels has helped buoy prices this year.
A senior Iraq oil official said on Monday that the country's
northern oil export pipeline was still not secure enough to
restart despite new U.S. led forces deployed to protect it.