Oil prices continue slide after OPEC fails to cut supply
Oil prices continue slide after OPEC fails to cut supply
Reuters, London
Oil prices slumped again on Monday, adding to a 20 percent
fall in the last two weeks, after OPEC exporters decided against
further supply curbs as the global economy slows.
European benchmark Brent crude oil futures fell 56 cents, or
2.4 percent, to US$22.70 per barrel by 1145 GMT (or 06.45 p.m
Jakarta time).
Fears of a falling demand due to a slowing global economy and
reluctance by the Organisation of the Petroleum Exporting
Countries (OPEC) to reduce supply have weighed heavily on markets
since mid-September.
"This looks like more of the same nervous selling," said
Christopher Bellew, a broker at Prudential Bache in London.
OPEC oil ministers decided against more export cuts at a
meeting last week, and some members such as Kuwait and Iran
indicated they were happy with prices below the cartel's $25 per
barrel target.
OPEC's reference oil price stood at $20.99 per barrel on
Friday, versus its $22-$28 per barrel target range, below which
it has an informal deal to cut production.
"There is a picture building up that Saudi Arabia and OPEC are
reluctant to act straight away," said Lawrence Eagles of brokers
GNI.
"The market is trying to identify the level which OPEC is
happy with. It knows OPEC's happy below $25 but it wants to know
where OPEC will intervene," he added.
Saudi Arabian Oil Minister Ali al-Naimi said last week that he
did not want to rush into further production cuts when OPEC's
one-million barrel per day reduction from September 1 has only
just begun to make itself felt.
OPEC agreed to meet again on Nov.14, but said ministers could
decide to make a further cut before that in an extraordinary
meeting or by agreeing a cut by telephone.
The Arab-dominated cartel found itself with little room for
manoeuvre last week as prices plunged, boxed in by political
sensitivities after the Sept.11 attacks in the United States and
deteriorating world economic conditions.
The group stood by powerless as its reference price of a
basket of seven crudes fell below $20 a barrel for the first time
in two years.
The U.S. attacks last month exacerbated the crunch on oil
demand as airlines traffic dropped significantly and American
motorists stayed off the roads and close to home.