LONDON, Dec 3: Oil prices tumbled under $88 on Monday as the market took positions ahead of an Opec meeting later in the week on whether or not to hike output, dealers said.

Last week, prices plunged on speculation that Opec might ramp up output and amid fears of slowing US economic growth, which would dampen demand in the world’s biggest energy consumer.

New York’s main contract, light sweet crude for January delivery, was down $1.07 to $87.64 per barrel.

Brent North Sea crude for January lost 98 cents to $87.28.

Opec ministers began arriving in the United Arab Emirates on Monday ahead of Wednesday’s key meeting to decide whether the 13-member cartel would boost oil supplies or leave production unchanged.

“There is still quite a bit of uncertainty as to what Opec will do on Wednesday when they meet in Abu Dhabi but the market has already priced in an expected boost in production,” said Victor Shum of energy consultancy Purvin and Gertz.

Ali al-Nuaimi, the oil minister of Opec kingpin Saudi Arabia, said on Monday that it was premature to talk about a possible increase in crude production by the cartel.

“Right now it will be very premature to tell you what the assessment is” of oil data which the Organisation of Petroleum Exporting Countries expects to study ahead of Wednesday’s output decision,” he said.

“We have not looked at the data yet. On Tuesday and the day after we will have an opportunity to look at all the data. We will assess and decide,” he said on his arrival in Abu Dhabi.

Opec is concerned that increasing output could oversupply the market, further dampening prices.

But leaving output quotas unchanged on Wednesday could send oil prices to recent record highs above $99 and even above the psychological $100-mark for the first time, crimping global economic growth, analysts said.

However, the pressure on Opec to raise output has eased considerably because prices are now off recent record levels.

“Ahead of the Opec meeting later this week, our view is that Opec members are now unlikely to raise the output quota,” said Sucden analyst Michael Davies.

“Oil prices have dropped below $90 a barrel on expectation of weaker US oil demand growth, which could give Opec an excuse not to raise quotas,” he said, adding: “General sentiment amongst Opec members is that the world oil market is well supplied.”

Analysts believe Wednesday’s output decision hangs on the preference of Saudi Arabia, the world’s biggest oil producer and exporter, and the only Opec member with spare output capacity.

Nuaimi had insisted last week that the world oil market was well supplied and that high prices did not properly reflect the supply-demand situation.

The Opec oil cartel is a key player in the energy market because it produces about 40 per cent of the world’s crude.—AFP