Oil prices stuck above US$30 as supply concerns persist
Oil prices stuck above US$30 as supply concerns persist
Agence France-Presse, London
Oil prices held up above US$30 a barrel here on Tuesday after an OPEC pledge to raise output failed to erase market tensions over a possible war in Iraq and a slump in exports from strike- hit Venezuela.
The price of benchmark Brent North Sea crude oil for February delivery stood at $30.15 per barrel in early trading against $30.20 at the close of the previous session, when prices had gained 53 cents per barrel.
In New York, reference light sweet crude February-dated futures climbed 58 cents to $32.26 per barrel on Monday.
The market was still scrutinising a decision by the Organisation of Petroleum Exporting Countries (OPEC) in Vienna on Sunday to raise its combined output quota by 1.5 million barrels per day from the start of February.
Though prices had fallen back initially in response to the announcement, and to a promise by OPEC heavyweight Saudi Arabia to avert a supply shortfall, prices later rebounded, remaining at levels uncomfortably high for oil consumers.
Deutsche Bank analyst Adam Sieminiski said the decision continued "OPEC's trend of doing just barely enough to satisfy world oil demand while awaiting developments in Iraq."
"In reality, little extra oil will hit the market as a result of this agreement and OPEC is probably adding just enough," he wrote in a note to clients.
Oil prices soared above $30 a barrel recently on the back of a six-week-old strike in Venezuela and a U.S. military build-up for possible war in Iraq.
The market squeeze has hit U.S. oil stock levels, and traders were waiting nervously for the latest snapshot of U.S. crude oil inventories on Wednesday for clues on whether a modest rise revealed the previous week had been a blip or a sign that OPEC had already moved to make up the shortfall.
Despite OPEC's efforts, oil prices remained above the symbolic 30-dollars-per-barrel threshold.
Lawrence Eagles, analyst at the brokerage firm GNI, said he was surprised by the renewed rally seen Monday, but added, "it is an understatement to say that the current situation is confusing."
He said that reports of an increase in Mexican exports of 120,000 barrels per day to 188,000 barrels per day had weighed on prices slightly.
There was also uncertainty over the prospect of a U.S.-led war in Iraq, Eagles added.
"Military officials are indicating that the date for an attack against Iraq might be postponed.
"U.S. military sources are now indicating that the U.S. troops that are going to the region would not be ready for months.
"This could be a sign that the U.S. is preparing for a possible extension of the timetable of war -- possibly even into next autumn" in the northern hemisphere, he added.