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Oil prices snap lower
AFP
NEW YORK
Petroleumworld.com 01 23 06World oil prices broke a pre-weekend rally Monday to turn lower despite the arrival of a cold snap in the United States, traders said.
In London, the price of Brent North Sea crude for March delivery fell 74 cents to settle at 52.70 dollars a barrel.
New York's main oil futures contract, light sweet crude for delivery in February, fell 86 cents to close at 51.13 dollars a barrel.
The contract expired at Monday's close, which made for particularly choppy trading as speculators closed out their positions, market watchers said.
"The weather is certainly supporting higher prices but today it's mostly technical (trading). There is a lot of volatility today ... due to the expiration of the February contract," James Williams at WTRG Energy said.
The US cold snap, which saw snow blanket parts of the northeast after weeks of mild temperatures, was expected to raise demand for heating fuel.
That explained an earlier rally in prices, traders said, but the market remained convinced that the United States has plentiful reserves of petroleum products.
"Realistically, when you look at (US) inventory numbers, the fundamentals are still pointing to lower prices," Williams said.
Crude futures surged by more than 1.5 dollars on Friday as the market switched its attention to the onset of colder weather.
Prior to the rebound, New York's oil price had slid to 49.90 dollars per barrel last Thursday, marking its lowest level since late May 2005. This came after the US government reported a strong jump in crude inventories.
Oil prices have dipped sharply in 2007, mainly owing to the mild US winter. Prices are about one-third lower than their record peak above 78 dollars reached during mid-2006.
In response, the Organization of the Petroleum Exporting Countries has twice announced cuts to its total output in a bid to support prices.
OPEC is due to cut its output by a further 500,000 barrels per day (bpd) from February 1. In October, OPEC members had agreed to reduce the cartel's combined output by 1.2 million bpd to 26.3 million.
However, the London-based Centre for Global Energy Studies said in a report Monday that actual OPEC output cuts were around half the promised amounts.
"The CGES estimates that aggregate production by the 10 OPEC members bound by the Doha and Abuja agreements dropped by 670,000 bpd between September and December last year, slightly more than half the volume pledged," the CGES said.
The report added: "Unless oil prices fall sharply, we do not expect the output cuts agreed in Doha and Abuja to be implemented fully."
Some OPEC members have called for the cartel to hold another emergency meeting to address the continuing slide in prices. But that call received short shrift last week from Saudi Arabia, the group's kingpin.
"Saudi Arabia is still acting as if they were willing to get prices lower, in part because they want to put pressure on Iran," Williams said.
Iran is under pressure from the United States and its allies to abandon its nuclear program.
The UN's International Atomic Energy Agency said Monday it was discussing with Iran its demand to withdraw some nuclear inspectors, but was confident it could continue monitoring the country's nuclear facilities.
Iran, OPEC's second-largest oil exporter, insists its nuclear program is solely aimed at meeting peaceful energy needs. However, the West fears that it could be diverted towards building a bomb.
AFP 22 2030 GMT 01 07
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