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."