Crude prices soften on OPEC speculation

Prices rise initially but then slip as traders speculate about a possible production increase

 

A possible production increase from the Organization of Petroleum Exporting Countries (OPEC) and the sliding dollar sent oil prices a little lower today, 26 November, 2007. Price rose earlier in the day but then gave up all its gains.

 

For the day ending Monday, 26 November, 2007, crude-oil futures for light sweet crude for January delivery closed at $97.7/barrel (lower by $0.49/barrel or 0.50%) on the New York Mercantile Exchange. Prices are up 65% from a year ago.

 

Brent crude oil for December settlement fell $0.66 (0.7%) to $95.1 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. Earlier in September, 2007, OPEC had agreed to raise production targets for the 10 members with quotas by 1.9% starting 1 November.

 

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.

 

Crude oil remains almost unchanged at MCX

 

Natural gas was little changed in New York on speculation supplies are adequate for heating needs in a winter forecast to be warmer than usual. Gas for December delivery rose 1.1 cents to $7.711 per million British thermal units.

 

Against this backdrop, December reformulated gasoline dropped 2.56 cents at $2.4414 a gallon, while December heating oil rose 0.24 cents at $2.7066 a gallon.

 

Earlier this month, OPEC reduced its fourth-quarter estimate of global oil demand growth to 1.97%, down from 2.1%, citing warmer winter weather in the Northern Hemisphere and the higher price of gasoline. The cartel also trimmed this year's world oil demand growth to 1.4% from 1.5%, but the cartel kept the first quarter of next year unchanged at 1.8%.

 

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 at marginally higher at Rs 3869/barrel, higher by Rs 1 (0.02%) against previous day's close. Natural gas closed at Rs 320.1/mmtbu as against previous close of Rs 317.4/mmtbu, higher by Rs 2.7/ mmtbu.