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RawStory.com: Oil shadows 100 dollars in Asian trade

Published: Wednesday February 20, 2008

World oil prices eased in Asian trade Wednesday but shadowed 100 dollars per barrel after peaking to fresh record levels overnight amid speculation OPEC will cut crude output, dealers said.

In afternoon trade, New York’s main contract, light sweet crude for delivery in March, was down 75 cents to 99.26 dollars per barrel.

The contract soared to an all-time intraday high of 100.10 dollars before closing up 4.51 dollars at a record 100.01 dollars on the New York Mercantile Exchange.

London’s Brent North Sea crude for April delivery fell 91 cents to 97.65 dollars, after settling at 98.56 dollars per barrel, a gain of 3.65 dollars on Tuesday.

The contract had earlier jumped to a record high of 98.70 dollars before settling.

Analysts said there was growing speculation that the Organisation of Petroleum Exporting Countries (OPEC), which supplies about 40 percent of the world’s oil, would cut output at its March 5 meeting in Vienna.

“When and how the oil is cut is the key factor here,” said Darius Kowalczyk, a senior investment strategist at CFC Seymour Securities in Hong Kong.

“I do not think oil reaching the 100-mark can be fully justified. It is not a big deal as demand is still on the decline.”

Earlier this month, OPEC left its official daily output ceiling at 29.67 million barrels of oil.

Iran on Sunday declined to rule out that the OPEC cartel would cut production at its next meeting in early March, a move vehemently opposed by oil-consuming countries.

OPEC is expected to cut output to prevent an oversupply as demand eases off in the northern hemisphere with the end of the winter season, Kowalczyk said.

Another factor supporting prices was the ongoing row between oil-rich Venezuela and US energy behemoth ExxonMobil, the world’s biggest oil company.

“Venezuela taking action to cut off supplies to Exxon last week has kept the market on edge despite efforts by officialdom to downplay the actual impact on supplies,” said Mike Fitzpatrick of MF Global.

ExxonMobil says it has won court orders in New York, London, the Netherlands and the Netherlands Antilles freezing some 12 billion dollars of assets in those jurisdictions from Venezuela’s state-owned oil producer PDVSA.

The legal battle relates to ExxonMobil’s bid to secure compensation after Venezuela’s government nationalised key oil fields in the Orinoco basin, including two ExxonMobil operations.

Traders are also on alert over possible further unrest in Nigeria, Africa’s biggest crude producer, dealers said.

Output from the Forcados export terminal in southern Nigeria is back up to between 150,000 and 200,000 barrels per day after a repair of a pipeline damaged by sabotage, Royal Dutch Shell said Tuesday.

Since the beginning of 2006, attacks by militants in the region have cut domestic oil production by 25 percent.

http://rawstory.com/news/afp/Oil_shadows_100_dollars_in_Asian_tr_02202008.html

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