Oil tiptoes down, awaits news on cuts
Oil tiptoes down, awaits news on cuts
SINGAPORE (Reuters): Oil prices were marginally softer on Monday despite renewed calls from some OPEC producers for fresh curbs on output when the cartel meets to review production policy on Friday.
U.S. benchmark light, sweet crude lost 11 cents in electronic dealings to stand at $27.90 a barrel after retreating more than 30 cents on Friday in New York.
The Organization of Petroleum Exporting Countries is widely expected to agree a second round of output restraints when it meets on March 16 to avoid a supply overhang in the second quarter, a period of seasonally weak demand.
But traders are waiting for a clear signal on the size of any reduction, which is expected to be between 500,000 and one million barrels per day (bpd).
A Kuwaiti media report on Monday said Kuwait would back a cut of between 500,000 and 750,000 bpd.
"Kuwait supports OPEC's inclination for a limited production cut of between 500,000-750,000," al-Rai al-Aam newspaper quoted Kuwaiti oil sources as saying.
Oil Minister Adel al-Subaih declined to confirm the report.
Saudi Arabia, the world's largest crude producer, reiterated on Friday that it saw a strong possibility for an agreement between the cartel's 11 members to cut production.
Iran, OPEC's second biggest producer, and Qatar again expressed their wish to see a cut but did not specify how big this should be.
Iranian Oil Minister Bijan Zanganeh was quoted by state television as saying on Sunday that the market faced an oversupply of 2.6 million bpd without a cut in production.
Iran and Qatar also called for producers outside of OPEC to restrain output.
OPEC's Saudi Arabia and Venezuela were due to hold talks with non-OPEC Mexico in Riyadh at 1530 GMT on Monday.
Mexican Energy Minister Ernesto Martens held 90 minutes of talks with Saudi Oil Minister Ali al-Naimi on Sunday during which they discussed how to balance world oil markets.
It was not immediately clear whether Mexico had been persuaded to participate in OPEC's widely expected cuts.
Prior to his Riyadh visit, Martens had repeatedly said there was no need for further output curbs as the global supply-demand situation was largely balanced, a view also held by non-OPEC Norway, the world's second largest exporter after Saudi Arabia.
"We have reviewed oil market conditions and we are working together to preserve market balance and ensure the interests of producers and consumers," Martens told the official Emirate news agency WAM after the talks.
Mexico, Saudi Arabia and Venezuela were the architects of a series of output cuts between 1998 and 1999 following a slump in oil prices to about $10 a barrel.
Those curbs between OPEC and non-OPEC producers helped to more than triple crude prices to above $35 a barrel in 2000, the highest level in a decade.
Soaring energy bills last year, however, raised calls from big consuming nations for higher output because of the risk of inflation and damage to economic growth.
OPEC raised production four times in 2000 by a total 3.7 million bpd.
The cartel now fears supplies will far outstrip demand in the second quarter when peak winter demand ebbs. It is also worried by signs of a global economic slowdown, which could dent growth in petroleum demand.
The group wants to keep prices at about $25 a barrel for a reference basket of crudes. OPEC's reference basket stood at $25.11 a barrel on Thursday.
The basket price would peg a target level for U.S. crude at about $29 a barrel.