Oil Steady, Dismisses OPEC Hike, UN Go-Ahead to Iraq
November 1, 2000 - 0:0
LONDON World oil markets held firm on Tuesday, shrugging off OPEC's latest attempt to tame the high crude prices threatening to dent global economic growth.
International benchmark Brent crude for December delivery was trading only 19 cents weaker at $30.95 a barrel. U.S. light crude stood four cents higher at $32.85.
The Organization of the Petroleum Exporting Countries (OPEC) confirmed on Monday that it would boost daily crude supply by 500,000 barrels per day (bpd) from Tuesday under an informal price band mechanism designed to ease high prices.
Expectations of the hike drove prices down sharply on Friday but traders on Tuesday said the market seemed indifferent because of doubts that OPEC would actually deliver new supplies given its spare output capacity limitations.
Traders also noted that fears of continued tensions in the Middle East were also keeping prices strong.
"The market is sort of indifferent (to the hike). The Middle East is still a factor. Right now it is not clear what the trend is. It's sort of a no man's land," said Tony MacHacek of Brokers Prudential Bache.
Violence in the Middle East pushed oil prices to a 10-year high of $35 this month, underscoring fears that oil supplies could be threatened if Israeli-Palestinians clashes spread in the region.
Palestinian President Yasser Arafat vowed defiance on Tuesday after Israeli helicopter missile attacks on three of his Fatah faction's headquarters and said he would go on fighting for an independent Palestinian state.
OPEC, meanwhile, is faced with the task of proving to oil traders that its latest output hike of 500,000 bpd will translate into actual new supplies and not just legitimize existing quota violations.
That will be a daunting task as most OPEC members are already pumping at full throttle.
Saudi Arabia, the world's largest oil exporter, holds the vast majority of OPEC's spare capacity but analysts and traders say it is already producing about 500,000 bpd above its output ceiling and is unlikely to go beyond that.
Saudi Arabian Oil Minister Ali al-Naimi said in remarks published in a Saudi newspaper on Tuesday that the kingdom and other producers were ready to fill any supply shortfall.
"Whenever there is an imbalance in supplies because of Iraq or others, all producers, including the kingdom, are ready to meet the need," Naimi said.
Saudi Arabia, Iran, Algeria, Kuwait and Qatar have said they will take part in the supply boost which will raise the cartel's production ceiling to 26.7 million bpd for the 10 members subject to quotas.
Sanctions-bound Iraq has no role on output pacts.
But traders have been keeping a close eye output from Iraq, seen as a maverick producer that will not hesitate to use crude barrels as a political weapon.
Baghdad had threatened to stop oil exports if its request for payment in euros was denied.
The dispute had raised market fears over Iraqi supplies.
But a UN panel on Monday approved Iraq's plan to receive oil-export payments in Europe's single currency after Baghdad decided to move the start date back a week.
(Reuter)
International benchmark Brent crude for December delivery was trading only 19 cents weaker at $30.95 a barrel. U.S. light crude stood four cents higher at $32.85.
The Organization of the Petroleum Exporting Countries (OPEC) confirmed on Monday that it would boost daily crude supply by 500,000 barrels per day (bpd) from Tuesday under an informal price band mechanism designed to ease high prices.
Expectations of the hike drove prices down sharply on Friday but traders on Tuesday said the market seemed indifferent because of doubts that OPEC would actually deliver new supplies given its spare output capacity limitations.
Traders also noted that fears of continued tensions in the Middle East were also keeping prices strong.
"The market is sort of indifferent (to the hike). The Middle East is still a factor. Right now it is not clear what the trend is. It's sort of a no man's land," said Tony MacHacek of Brokers Prudential Bache.
Violence in the Middle East pushed oil prices to a 10-year high of $35 this month, underscoring fears that oil supplies could be threatened if Israeli-Palestinians clashes spread in the region.
Palestinian President Yasser Arafat vowed defiance on Tuesday after Israeli helicopter missile attacks on three of his Fatah faction's headquarters and said he would go on fighting for an independent Palestinian state.
OPEC, meanwhile, is faced with the task of proving to oil traders that its latest output hike of 500,000 bpd will translate into actual new supplies and not just legitimize existing quota violations.
That will be a daunting task as most OPEC members are already pumping at full throttle.
Saudi Arabia, the world's largest oil exporter, holds the vast majority of OPEC's spare capacity but analysts and traders say it is already producing about 500,000 bpd above its output ceiling and is unlikely to go beyond that.
Saudi Arabian Oil Minister Ali al-Naimi said in remarks published in a Saudi newspaper on Tuesday that the kingdom and other producers were ready to fill any supply shortfall.
"Whenever there is an imbalance in supplies because of Iraq or others, all producers, including the kingdom, are ready to meet the need," Naimi said.
Saudi Arabia, Iran, Algeria, Kuwait and Qatar have said they will take part in the supply boost which will raise the cartel's production ceiling to 26.7 million bpd for the 10 members subject to quotas.
Sanctions-bound Iraq has no role on output pacts.
But traders have been keeping a close eye output from Iraq, seen as a maverick producer that will not hesitate to use crude barrels as a political weapon.
Baghdad had threatened to stop oil exports if its request for payment in euros was denied.
The dispute had raised market fears over Iraqi supplies.
But a UN panel on Monday approved Iraq's plan to receive oil-export payments in Europe's single currency after Baghdad decided to move the start date back a week.
(Reuter)