Oil Prices Fall Below $62 a Barrel

Posted 11 December 2006 @ 03:14 pm EET     Print     Reprint     E-Mail     Comments

VIENNA (AP) - Austria Oil prices fell Monday amid mixed signals from OPEC officials about the possibility of production cuts when the organization meets next week. Forecasts of warmer U.S. weather also depressed prices.

Light, sweet crude for January delivery dropped 31 cents to $61.72 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. Brent was trading up 13 cents at $62.33 a barrel on the ICE Futures exchange.

Heating oil was down a cent at $1.7471 a gallon and unleaded gasoline futures were steady at $1.6200 a gallon. Natural gas prices dropped nearly 19 cents to $7.375 per 1,000 cubic feet. The market is somewhat uncertain what to expect from Thursday's meeting of the 11-member Organization of Petroleum Exporting Countries.

Some OPEC officials have been pressing in recent days for a cut in output on top of the production cut of 1.2 million barrels a day approved in October, while others have indicated that with prices above $60 a barrel, the cartel was likely to refrain from cutting output at the meeting.

Some Saudi officials have expressed satisfaction with current price levels, but Saudi Oil Minister Ali Naimi said recently that he was concerned about excessively high oil inventories in major consuming nations.

Vienna's PVM Oil Associates also suggested that a weaker dollar could add to sentiment for production increases because crude is sold in dollars but much of the consumer goods purchased by OPEC nations is denominated in euros.
"A weaker U.S. currency does have an effect on oil producers' earnings," it said.

Recent data from the International Energy Agency showed stocks among the 30 members of the Organization for Economic Cooperation and Development at the end of September were 2.76 billion barrels, the highest level in almost eight years and 4.5 percent higher than a year ago.

Expectations of milder temperatures in the United States also weighed on prices. Temperatures in the Northeast, the nation's largest heating oil market, were expected to moderate this week, with above-normal temperatures through most of the nation, according to the National Weather Service.