Crude at lowest level in a week

Prices drop by more than $3 as OPEC become serious on output increase

 

Crude oil price was at its lowest level in a week after traders speculated that Gulf members of Organization of Petroleum Exporting Countries (OPEC) are in serious discussions about boosting output by upwards of 750,000 barrels a day when they meet on 5 December in Abu Dhabi. Price also slipped after Saudi Arabia's oil minister said the country increased production to the highest this year.

 

For the day ending Tuesday, 27 November, 2007, crude-oil futures for light sweet crude for January delivery closed at $94.4/barrel (lower by $3.3/barrel or 3.4%) on the New York Mercantile Exchange. Prices fell to $94.2/barrel during intraday trading. Prices are up 56% from a year ago.

 

Brent crude oil for December settlement fell $2.79 (2.9%) to $92.53 on the London-based ICE Futures Europe exchange.

 

Traders speculated today that the 12 members of the OPEC will probably increase output 1.1% to 31.6 million barrels a day this month. Also, as per reports, Saudi Arabia, the biggest producer in the OPEC, is pumping 9 million barrels a day, the most in more than a year.

 

Last week, prices rose to $98.62/barrel during intra day trading on 7 November, 2007. Oil prices had rose 16% in October, 2007, the biggest one-month gain since September 2004.

 

All heating products plunge with crude

 

Natural gas declined in New York on expectations stockpiles may have fallen less than normal for this time of year because of warmer weather. Gas for December delivery fell 17.9 cents (2.3%) to $7.544 per million British thermal units.

 

Against this backdrop, December reformulated gasoline dropped 6.84 cents at $2.3730 a gallon and December heating oil fell 5.32 cents at $2.6534 a gallon.

 

In the currency market today, the dollar ignored downbeat data on U.S. home prices and firmed modestly against most major currencies. News that Abu Dhabi will make a $7.5 billion investment in Citigroup also led dollar gain against euro. The dollar index, which tracks the performance of the dollar against a basket of major currencies, rose 0.3% at 75.115.

 

Attacks on oil facilities in Middle East and tight supplies from OPEC have bolstered crude prices this year. As per the U.S. Energy Information Administration, tight global energy supplies are expected to keep energy prices high through 2008.

 

At the MCX, crude oil for December delivery closed lower at Rs 3758/barrel, lower by Rs 111 (2.9%) against previous day's close. Natural gas closed at Rs 312.3/mmtbu as against previous close of Rs 320.1/mmtbu, lower by Rs 7.8/ mmtbu.