Oil prices slip as Indonesia dampens OPEC cut talk
Oil prices slip as Indonesia dampens OPEC cut talk
Reuters
London
World oil prices slipped on Wednesday when Indonesia said OPEC
did not need to curb supplies despite an expected resumption in
exports from Iraq.
Indonesian Mines and Energy Minister Purnomo Yusgiantoro said
the cartel did not need to consider cuts while prices were inside
OPEC's US$22-$28 per barrel band.
International benchmark Brent crude oil slipped six cents to
$27.22 per barrel, while U.S. crude futures shed two cents to
$30.65.
"Now that a consensus appears to be emerging within OPEC that
a production cut at its meeting next week is not necessary, we
expect crude oil prices to continue weakening over the next few
days," said analysts at Barclays Capital Research.
Some OPEC ministers had hinted that a cut might be on the
cards at a meeting set for next week, but prices have risen
strongly towards the upper end of OPEC's target range.
OPEC's reference export price stood at $27.09 on Tuesday.
"Our interest is the price stays above $22 per barrel. If
prices stay above that, then there is no need for OPEC to cut
quotas," Yusgiantoro said.
War-torn Iraq has suspended exports since the U.S.-led war
began and the authorities expect the first tankers to lift crude
from storage tanks in the middle of June.
Previous targets for resuming exports have been put back
because of unexpected problems with looting and sabotage in the
lawless country.
The head of Iraq's southern oil company, which produced most
of Iraq's crude before the war, said on Wednesday output there
was just a fraction of pre-war levels because of the security
problems.
Total Iraqi output now stands at 750,000 barrels per day,
about a quarter of pre-war levels, and Iraqi authorities in
Baghdad expect output to double by the middle of the month.
Paul Stevens, professor of petroleum policy at Britain's
University of Dundee said the looting and sabotage indicated that
current forecasts for Iraqi exports were far too high.
"People are grossly underestimating the time it will take to
restore pre-war capacity in Iraq," he said.
"The U.S. and Britain don't have the troops on the ground or
the administration to do it."