Oil
prices plunge to 60 dollars on US stocks, OPEC news
AFP
NEW
YORK
Petroleumworld.com
03 09 06
World oil prices dived to 60 dollars a barrel on Wednesday after
the US government reported robust energy stockpiles and the OPEC
cartel maintained its crude production levels.
New York's main contract, light sweet crude for delivery in April,
plummeted 1.56 dollars to close at 60.02 dollars a barrel. At
one point the contract was as low as 59.25 dollars.
In London, the price of Brent North Sea crude for April delivery
sank 1.14 dollars to 60.03 dollars a barrel, off a low of 59.26
dollars.
The intra-day troughs were the lowest levels plumbed by both contracts
since February 17.
"We had a huge US crude build and OPEC said they're going
to just keep pumping at high levels, so between the two of those
it's pretty easy to understand the sell-off," PFC Energy
analyst Jamal Qureshi said.
The Organization of the Petroleum Exporting Countries agreed at
a meeting in Vienna Wednesday to keep its oil output at a near
25-year high of 28 million barrels per day (bpd).
News that US crude stocks stood near a seven-year high accelerated
the market retreat.
The Department of Energy (DoE) reported that US crude reserves
rose by 6.8 million barrels to 335.1 million in the week to March
3. That was way over market forecasts for a rise of 1.5 million
barrels.
The news was "extremely bearish" for prices, Societe
General analyst Deborah White said. "Crude is still flooding
in despite supply disruptions," she said.
US crude oil reserves are some 10 percent higher than at the same
stage a year ago, and are at their highest level since May 1999,
the DoE said.
US gasoline inventories dipped 1.1 million barrels to 224.8 million
in a sharper-than-expected fall, according to the DoE, but traders
ignored that news.
Distillate reserves, used for heating oil and diesel fuel, fell
by 2.7 million barrels to 131.4 million, less than the predicted
decline of 1.5 million.
Oil prices, however, received some support at 60 dollars a barrel
because of tensions in key energy producers Iran and Nigeria --
a factor that had encouraged OPEC to decide against reducing output.
The cartel's meeting was dominated by fears over the possible
impact on the market of Iran's nuclear standoff with the West.
A political settlement of the Iran nuclear crisis is still possible,
UN nuclear chief Mohamed ElBaradei said Wednesday.
He called on all parties to "lower the rhetoric" at
the end of an International Atomic Energy Agency meeting, also
in Vienna, that cleared the way for possible UN Security Council
action against Tehran.
Traders fear that reprisals against Iran, the second-biggest OPEC
producer after Saudi Arabia, could lead to a cut in the country's
exports.
Speaking after the OPEC decision, Iranian Oil Minister Kazem Vaziri-Hamaneh
gave assurances that his country would not halt its oil exports,
even if hit by economic sanctions over its nuclear programme.
But top Iranian security official Javad Vaidi, also speaking in
Vienna, said Iran would have to "review" its policies
in case the political environment changed.
Fimat analyst Mike Fitzpatrick said the tensions that have brought
crude prices so high in recent weeks "may have retreated,
but they have not disappeared".
"Nigeria's rebels remain restive, and Iranian intransigence
can only make it appear more and more like they ultimately desire
to develop nuclear weapons," he said.
"OPEC could be successful in keeping prices away from 70
dollars, but they probably can't push them much below 60 dollars
for too long."
AFP
03 07 06
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© 2006 AFP. All rights reserved
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