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Taipei Times: Warmer weather forecast leads to oil price tumble

AP, NEW YORK
Sunday, Dec 10, 2006, Page 10

Oil prices fell on Friday, ending the week 2.2 percent lower as traders anticipated warmer weather and an upcoming OPEC meeting, and shrugged off violence in Nigeria, Africa’s largest oil producer.

After initially climbing by more than US$1 a barrel, light sweet crude for delivery next month fell by US$0.46 to settle at US$62.03 a barrel on the New York Mercantile Exchange.

January Brent crude at London’s ICE Futures exchange fell US$0.37 to settle at US$$62.20 a barrel.

There is considerable uncertainty ahead of a meeting next week of OPEC oil ministers.

Some officials have been pressing in recent days for a cut in output on top of a production cut of 1.2 million barrels a day, approved in October. Saudi oil minister Ali Naimi said earlier in the week that he was concerned about a surplus of global crude-oil inventories.

`fair’

On Thursday, however, Saudi Arabian Ambassador to the US, Prince Turki al-Faisal, said current crude oil prices were “acceptable and imminently fair.”

“They want to keep uncertainty in the market,” Alaron Trading Corp broker Phil Flynn said.

Recent data from the International Energy Agency showed stocks held among the 30 members of the Organization of Economic Cooperation and Development at the end of September at 2.76 billion barrels.

This was the highest level in almost eight years and 4.5 percent higher than a year ago.

Naimi said OPEC needs to take 100 million barrels out of the market to balance it. Kuwaiti Oil Minister Sheik Ali al Jarrah al Sabah, who was also at a meeting of Arab oil producers in Cairo, agreed.

“Is Saudi Arabia willing to cut production by a half million barrels? That’s the 64 million dollar question,” Oppenheimer & Co energy analyst Fadel Gheit said.

Gheit said OPEC “got spooked when oil crashed from US$77 a barrel to US$57 a barrel” at the end of summer, which is what prompted the October cut.

But he said he has a difficult time believing that the Saudis would willingly give up market share.

“Any cut will be mostly market driven,” meaning it would stem from a dropoff in demand, he said.

militants

In Nigeria, a militant group attacked a southern oil export terminal belonging to a subsidiary of Italy’s Eni SpA early on Thursday, taking three Italians and a Lebanese hostage and killing another person, officials said.

Agip officials said oil exports at the 200,000 barrels a day terminal were not affected. The group vowed more attacks will follow if their long-standing demands, which include compensation from Royal Dutch Shell PLC for alleged environmental pollution, are not met.

Since the beginning of this year, militant groups in Nigeria have attacked pipelines and taken workers hostage in violence that has kept about 500,000 barrels a day of Niger Delta crude off the market, although output has grown offshore Nigeria.

In other Nymex trading, natural gas futures fell US$0.11 to settle at US$7.561 per 1,000 cubic feet, unleaded gasoline futures fell less than a penny to settle at US$1.623 a gallon and heating oil futures fell US$002.15 to settle at US$1.7573 a gallon.

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