Oil prices slide as Opec takes cautious approach

OIL PRICES slid last week after several Oil Petroleum Exporting Countries (Opec) members said the cartel would wait until its mid-March meeting to make production cuts. As a result, US crude oil shares fell US$0.41 to a low of US$46.07.

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By  Rhys Jones Published  February 13, 2005

OIL PRICES slid last week after several Oil Petroleum Exporting Countries (Opec) members said the cartel would wait until its mid-March meeting to make production cuts. As a result, US crude oil shares fell US$0.41 to a low of US$46.07. Opec president, Sheikh Ahmad Al Fahd Al Sabah, said last week that oil ministers would need to discuss taking action if prices fell by 30% to 40% or surged above US$50, or if commercial oil inventories climbed significantly. However, he said there was no need for talks yet. “Until now, I don’t think there’s any need for any consultations,” said Sheikh Ahmad, who is also Kuwait’s oil minister. Prices have fluctuated between US$45 and US$50 a barrel over the past month, with dealers on edge because of possible pre-emptive production cuts from Opec. But with prices hovering well above US$40 a barrel, second-quarter output tightening measures look unlikely at the moment. “We will wait until March [for any output decision],” said Chakib Khelil, Algeria’s energy and mines minister. Opec opted to keep production steady at its last meeting on January 30, but left the door open for possible cuts to be agreed by telephone, keeping traders on edge. Opec is scheduled to meet in Isfahan, Iran, on March 16, to look at what could happen in the second quarter, when global demand recedes after the winter. “Our worry is not now; our worry is the second quarter,” said Sheikh Ahmad. Oil prices have fallen more than 7% from a peak near US$50 two weeks ago with traders now focusing on the second-quarter demand slump. “Although nearly two months of climatic winter remain ahead of us, the market already has its attention elsewhere,” read a recent SG Commodities report.

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