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UpstreamOnline: Oil falls on Opec output hint

By Upstream staff

Oil fell more than $1 toward $95 today after Saudi Arabia said Opec would discuss boosting oil output at an upcoming meeting to cool surging oil prices.

US light crude for December delivery fell as much as $1.28 in early electronic trading and was down $1.14 at $95.18 a barrel by 0344 GMT.

US oil struck a record high of $98.62 a barrel last Wednesday due to winter supply concerns and a falling US dollar.

London Brent crude lost 88 cents to $92.30 a barrel.

“The Opec uncertainty does provide some downward pressure this morning but the market may shift its focus to the expiring December options contract later in the day and start rising again,” Gerard Burg, a resource analyst at the National Bank of Australia, tol.d Reuters.

Yesterday Saudi Arabia said the exporter group would discuss an increase in output at an upcoming meeting in an effort to cool record prices nearing $100 a barrel.

Saudi Oil Minister Ali al-Naimi did not make clear whether he was referring to an Opec heads of state meeting in Riyadh later this week or its next formal policy meeting on 5 December in Abu Dhabi.

Qatari Energy Minister Abdullah al-Attiyah said later that he did not expect an output decision in Riyadh.

But the fact that Naimi, the group’s most influential voice, raised the possibility of an increase put traders on alert after a more than 40% surge in prices since mid-August, which most ministers have blamed on speculation, politics and a weak dollar.

“This (increase in output) is premature but we will discuss the issue when we meet,” Naimi told Reuters in Kuwait in what appeared to be his first public comments since oil vaulted above $80 for the first time two months ago.

The rally has barely paused since then, despite the 500,000 barrels per day increase in production that Naimi persuaded his peers to accept at their last meeting in September.

Analysts said the decline in Asia’s stock markets, led by Wall Street’s sharp losses on Friday, could also be weighing on oil prices.

Analysts said they expected oil prices to be highly volatile this week, also influenced by the expiry of Nymex December options contracts tomorrow and the restart of production at North Sea fields following storms.

The dollar extended its slide to hit an 18-month low against the yen today on jitters about bigger credit-related losses at US financial players, offering support to oil prices.

Oil production has restarted at a number of North Sea fields that had been affected by storms, but Nexen said on Friday it had temporarily halted production at its 200,000 bpd Buzzard oilfield after storms damaged one of its power generation turbine exhaust stacks.

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12 November 2007 05:48 GMT  | last updated: 12 November 2007 05:48 GMT

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1 Comment on “UpstreamOnline: Oil falls on Opec output hint”

  1. #1 Ivo Cerckel
    on Nov 12th, 2007 at 02:43

    FT is arguing this morning that the Summit will move prices away from the dollar.

    This will be officialised in the Riyadh Declaration.

    Market focus ahead of this weekend’s Opec head of states’ summit is on the closer relationship between the rising oil price and the fall of the US dollar, and any move by the cartel to price oil away from the dollar.
    (Wealth flows into currencies
    By Javier Blas in Riyadh
    Financial Times, November 11 2007 19:17
    http://www.ft.com/cms/s/0/e18fd572-907d-11dc-a6f2-0000779fd2ac.html)

    As is customary in OPEC summits, which are convened irregularly, it is expected that a “DECLARATION OF PRINCIPLES” will be issued, defining the organization’s stance vis-à-vis the current, fundamental developments in international oil markets. These announcements usually refer to general and global economic and oil topics. The declaration of principles adopted by member states following the first meeting, in Algeria in 1975, included new guidelines for oil policies in light of the new relations between international companies and exporting countries, especially after the important OPEC decisions in the fall of 1973.
    These guidelines have indicated that the organization, through consulting and coordinating with the rest of the world, has established a new international economic order, built on the foundations of justice, common understanding, and concern with the prosperity of peoples. The second declaration of principles was issued after the Second OPEC Summit in Caracas in 2000, when OPEC affirmed its adherence to the guiding principles of the organization, in order to achieve a stable international energy order. It is expected that a RIYADH DECLARATION will be issued at the Third Summit, taking up current oil industry fundamentals and the challenges faced by exporting countries, such as the importance of environmental preservation and securing petroleum supplies on a regular basis.
    (The Third OPEC Summit Takes Place under Turbulent Economic Conditions
    Walid Khadduri Al-Hayat – 11/11/07//
    http://english.daralhayat.com/business/11-2007/Article-20071111-2ecce25b-c0a8-10ed-00a4-2c31d3491213/story.html)

    Ivo Cerckel
    ivocerckel AT siquijor DOT ws
    http://blogs.siliconindia.com/goldrupee/

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