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LONDON, Oct 15: Oil prices fell on Monday, depressed by the prospect of slack global demand and little prospect of imminent action from suppliers to tailor output accordingly.
Brent North Sea crude for November delivery fell to 21.50 dollars a barrel from 21.73 dollars at the close on Friday. The New York light sweet crude November contract closed Friday at 22.50 dollars, down 84 cents.
Dealers had been hoping for another output cut from the Organisation of Petroleum Exporting Countries (OPEC) to give prices a boost.
Opec has reserved the right to trim output because prices have persisted below its $22 floor for three weeks now. On Friday, the Opec basket price stood at $19.82 a barrel, the cartel said Monday.
But Opec distanced itself over the weekend from reports of a special meeting in Lisbon this week with other world producers that could have resulted in a tightening of the oil taps.
Instead Secretary General Ali Rodriguez merely reiterated Monday that the grouping might or might not meet before its next scheduled gathering on November 14, when it might or might not cut output.
If necessary we will cut of course. All depends on the situation of the markets because our objective is to maintain the stability, Rodriguez told the BBC.
Markets were not surprisingly underwhelmed by the comments.
Opec keep making rumblings that they’re going to do something, but if they’re going to cut they don’t really need a meeting to do that, said ABN Amro dealer Terry Wilson.
Wilson said prices were under pressure because people are looking at the overall weak economic position.
Demand for oil is not as much as people were forecasting, so the market at the moment just has got one way to go, he told AFP.
The International Energy Agency now forecasts global demand to come in at 76 million barrels a day this year, from a previous estimate of 76.4 million bpd.
SINGAPORE: Singapore gas oil prices were dragged lower on Monday after crude fell nearly $1 a barrel prior to the weekend, although bearish fundamentals added pressure to the market, traders said.
The market is still under pressure, because I think that ultimately, the Middle East cargoes will have to come here, said a trader with a Western oil firm.
Traders said with Europe prices over Asia — or the premium of IPE gas oil futures to Singapore spot levels — currently at narrow levels, it was uneconomic for Mideast cargoes to head West, prompting some volumes to eventually move to Asia.
The West is deemed an attractive destination for Mideast barrels when IPE gas oil is at least $14 a ton over Singapore levels. The current premium of IPE over Singapore is a mere $8.
In contrast to rising supplies, regional enduser demand was holding just steady, with no fresh buying coming from main importers Indonesia and Vietnam.
Traders said the only firm buying seen for gas oil was on the Singapore cash market, where one cargo traded at $25.50 a barrel, sharply lower compared to the fixed-price bid/offer on Friday’s market at $26.00/$26.85.
Traders are hoping that the market weakness would attract some steady cash demand over the next week as buyers hunted for bargains, providing some support to prices.—AFP/Reuters
