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 $22.70 per barrel by 1145 GMT.
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 November 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 September 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.