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Oil prices bounce off lows, hold above 60 dollars
By Isabelle Tourne
AFP
NEW YORK
Petroleumworld.com 09 26 06
Crude oil futures bounced off six-month lows Monday and held above 60 dollars a barrel as the market failed to push prices below the key psychological barrier.
New York's main contract, light sweet crude for delivery in November, rose 90 cents to close at 61.45 dollars per barrel after dipping as low as 59.52 dollars, the lowest levels since early March.
In London, Brent North Sea crude for November delivery advanced 39 cents to settle at 60.80 dollars per barrel after touching a six-month low of 59.32 dollars.
Analysts said the market became concerned that OPEC may begin to make efforts to trim production if prices drop precipitously.
Phil Flynn at Alaron Trading said the market was spooked by comments from cartel president Edmund Daukoru, who indicated the Organization of Petroleum Exporting Countries could intervene to stem the drop in prices.
"I think it's possible that OPEC decides (to hold) an extraordinary meeting in early October with maybe the announcement of a reduction by one million barrels a day," he said.
James Williams at WRTG Energy also said this was a concern in the markets:
"The market seems to think it might happen," he said.
"If crude dropped another five dollars, an extraordinary meeting to cut production would be close to a certainty. In any case I have little doubt that OPEC will cut production before spring.
Before the rebound, analysts said there was strong downward momentum.
"The market is looking scary ... it's falling like crazy and people are bailing out of their positions," said Tony Nunan, manager for energy risk management at Mitsubishi Corporation in Tokyo.
"The market seems to be bearish with the Iran situation looking like it's reaching a compromise."
On Sunday, Iranian President Mahmoud Ahmadinejad had signaled his government's readiness to put "everything" on the negotiating table, if those in the US government who talk about regime change in Iran abandon their plans.
"If they change their behavior, it is possible to talk about everything," the Iranian leader told The Washington Post. "It's the attitude and the approach of some American politicians that ruin things."
The comments came as world powers are considering imposing sanctions that would target Iran's nuclear and ballistic missile sectors if Tehran persists in refusing to suspend uranium enrichment.
The United States is calling for economic sanctions against Iran, unless Tehran halts its uranium enrichment activities.
Analysts warn that Iran, the world's fourth-biggest crude producer, could retaliate to economic sanctions by slashing exports, risking another surge in crude oil prices.
AFP 25 2008 GMT 09 06
Copyright ©2006 AFP. All Rights Reserved.
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