Oil prices ease, but near nine-year high
Oil prices ease, but near nine-year high
SINGAPORE (Reuters): Oil prices in Asia fell on Tuesday, but were near nine-year highs as Iraq's rejection of a short extension to its UN oil deal underpinned sentiment.
January New York Mercantile Exchange (NYMEX) crudes traded at US$26.53 per barrel at 0730 GMT, down 13 cents from the New York close. The contract had soared 85 cents in the New York market on Monday.
Current U.S. crude prices are not far from the nine-year peak of $27.15 hit on November 23. Traders said profit-taking pulled prices lower in Asia following the New York rally, but that the absence of Iraqi exports would stop prices falling too far.
At the weekend, Iraq rejected a UN extension of one-week for its "oil-for-food" program, saying it was impractical.
"What is a one-week extension, it does not mean anything. Iraq refuses this procedure," Iraq's oil minister Amer Mohammed Rasheed told reporters in Cairo on Saturday.
Iraq halted exports of some 2.4 million barrels per day on November 22 in protest at an earlier UN proposal for a two-week extension of the deal.
The latest rejection is expected to keep Iraq exports out of the market for another two weeks at least, and even that was contingent on a full six-month renewal of the deal, traders said.
Under the oil-for-food program with the UN, Iraq is allowed to sell $5.26 billion worth of oil over six months to buy food and medicine.
Coming at a time when peak winter demand in the northern hemisphere is looming, the prolonged Iraq halt in exports was exacerbating concerns about a supply shortage.
Assurances by producers that supply curbs will be kept until the end March 2000, expiry, were also supportive.
Mexican Energy Minister Luis Tellez said on Monday he did not expect prices to spike from current levels and he ruled out any increase in output before March.
Saudi Oil Minister Ali al-Naimi said on Saturday there was no intention at present of adjusting production cuts.
"There is no reason for us to take any procedures besides what we agreed on," Naimi said.