07/01/2005 13:52
Oil prices held strong Friday after a $2, five percent surge higher as OPEC ministers weighed the timing of a possible further output cut for the spring.
U.S. crude futures which had hit the highest levels since late December on Thursday, pulled back 17 cents to $45.39 a barrel while London Brent crude was 2 cents down at $42.83 a barrel.
"We expect that volatility is likely returning to the high levels of late last year and the markets will probably work somewhat higher from here," brokers Refco said in a report.
"For the next two weeks, the market will be overshadowed by the issues of insurgency associated with the Iraqi elections and the policy uncertainty surrounding the OPEC ministerial meeting, both forthcoming on Jan 30," the report added.
Oil's sharp price reversal since the highs of $55.67 a barrel set in October has alarmed OPEC members, who view it as a sign of rising energy inventories and the possibility of a supply overhang ahead of the slack demand spring season.
Iranian Oil Minister Bijan Zanganeh said OPEC should take action at its Jan. 30 meeting if oil fell under $40 a barrel, effectively setting a higher threshold for output cuts by producing countries.
A cutback of up to 1.5 million barrels per day (bpd) could be made to official output limits, in the event of a sub-$40 U.S. oil price, an OPEC source also said.
"We should be very concerned about the market. It needs action," Zanganeh told reporters in India. But he added: "I don't think prices will quickly go below $40."
OPEC's biggest producer Saudi Arabia, keen to prevent damage to world economic growth, is thought unlikely to support output cuts with prices at $45 a barrel.
Thursday's sharp price rise was partly due to a sudden cold snap in Northeastern United States that has enjoyed relatively mild weather so far this winter. Meteorologists said temperatures in the world's largest heating oil market would continue to stay mild.
The mild weather has boosted stocks of U.S. heating oil as well as of crude, with inventories of the latter standing 22.5 million barrels above year-ago levels. Latest official data revealed that heating oil stocks had risen 1.2 million barrels in the last week of December.
Supply concerns also dog exports from the North Sea where over 350,000 bpd of crude production remains shut, in while continuing violence in Iraq ahead of the month-end elections has also helped to staunch the selling.
U.S. crude futures which had hit the highest levels since late December on Thursday, pulled back 17 cents to $45.39 a barrel while London Brent crude was 2 cents down at $42.83 a barrel.
"We expect that volatility is likely returning to the high levels of late last year and the markets will probably work somewhat higher from here," brokers Refco said in a report.
"For the next two weeks, the market will be overshadowed by the issues of insurgency associated with the Iraqi elections and the policy uncertainty surrounding the OPEC ministerial meeting, both forthcoming on Jan 30," the report added.
Oil's sharp price reversal since the highs of $55.67 a barrel set in October has alarmed OPEC members, who view it as a sign of rising energy inventories and the possibility of a supply overhang ahead of the slack demand spring season.
Iranian Oil Minister Bijan Zanganeh said OPEC should take action at its Jan. 30 meeting if oil fell under $40 a barrel, effectively setting a higher threshold for output cuts by producing countries.
A cutback of up to 1.5 million barrels per day (bpd) could be made to official output limits, in the event of a sub-$40 U.S. oil price, an OPEC source also said.
"We should be very concerned about the market. It needs action," Zanganeh told reporters in India. But he added: "I don't think prices will quickly go below $40."
OPEC's biggest producer Saudi Arabia, keen to prevent damage to world economic growth, is thought unlikely to support output cuts with prices at $45 a barrel.
Thursday's sharp price rise was partly due to a sudden cold snap in Northeastern United States that has enjoyed relatively mild weather so far this winter. Meteorologists said temperatures in the world's largest heating oil market would continue to stay mild.
The mild weather has boosted stocks of U.S. heating oil as well as of crude, with inventories of the latter standing 22.5 million barrels above year-ago levels. Latest official data revealed that heating oil stocks had risen 1.2 million barrels in the last week of December.
Supply concerns also dog exports from the North Sea where over 350,000 bpd of crude production remains shut, in while continuing violence in Iraq ahead of the month-end elections has also helped to staunch the selling.
Related Articles
LATEST NEWS
24/04