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Oil prices rise in Asian technical rebound
AFP
SINGAPORE
Petroleumworld.com 09 12 06Oil prices rose in Asian trade Tuesday, finding support in a technical rebound after recent sustained weakness was confirmed by an OPEC decision to maintain current output levels, dealers said.
At 2:50 pm (0650 GMT) New York's main contract, light sweet crude for October delivery, was up 39 cents at 66.00 dollars a barrel from 65.61 dollars in late US trade Monday.
The October contract had sunk to 64.85 dollars, its lowest point since March 28, in US hours.
Brent North Sea crude for October gained 40 cents to 64.95 dollars.
Dariusz Kowalczyk, a Hong Kong based senior investment strategist for CFC Seymour, said the recent reverse had breached technical markers that generally spark a rebound.
"The technical support price was crossed and led to a bounce," he said.
OPEC oil ministers decided Monday to maintain their oil output ceiling at a near 25-year high of 28 million barrels per day but attention quickly switched to when the cartel might cut production.
The Organization of Petroleum Exporting Countries has been pumping at near full capacity in a bid to cool the oil market but with Monday's price drop, attention switched from the danger of high prices to the risk of an abrupt fall.
"The topic of the day is clearly the determination of a price floor below which OPEC should cut its production," said analysts at French bank Societe Generale.
Societe Generale said the floor price had previously been assumed to be about 50 dollars, based on "isolated comments from some members".
It was unclear what price would ultimately trigger a cut in output by OPEC, which as an organisation aims to secure long-term returns for its members by stabilising prices.
OPEC ministers after their meeting Monday in Vienna said they were ready to respond to sharp price changes.
The cartel provides about one third of global oil supplies.
Crude prices have fallen sharply since they breached 78 dollars in July against a backdrop of the Israel-Hezbollah conflict in Lebanon and continuing anxiety over Iran's nuclear program.
Both those issues appear to be cooling, especially after Tehran appeared to point the way to a compromise on uranium enrichment with its offer of a two-month suspension of such work.
Iran faces a threat of sanctions for defying a UN Security Council August 31 deadline for it to freeze its nuclear fuel work.
Kowalczyk said he expects "future declines in prices as the US may agree to Iran's conditions to push oil prices lower, in line with (domestic) policies for the November mid-term (US) elections."
AFP 120716 GMT 09 06
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