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VIENNA, Oct 11: The basket oil price used by Opec to set its output nudged upwards slightly but remained below $20, according to official figures on Wednesday.
The basket price, based on an average of seven world crudes, stood at to $19.86 on Wednesday, its 13th straight trading day below the cartel’s $22 target floor. On Tuesday the Opec price had stood at 19.61.
An Opec official said no announcement on any Opec decision was expected on Wednesday.
The Organization of Petroleum Exporting Countries (Opec), which produces 40 per cent of the world’s crude, has faced a dilemna over how to react to slumping oil prices since the September 11 attacks on New York and Washington.
Under normal circumstances the 11-member cartel would cut its production levels in response to falling prices, but this is seen as politically difficult amid the US-led war and as western economies head towards recession.
Opec ministers decided at a September 26, meeting to leave their production quotas unchanged.
Under a price-band mechanism the 10-day period below the $22-28 target range would trigger an automatic production cut of 500,000 barrels per day.
The 10th trading day was reached last Friday, but Opec said on Monday it would not immediate trigger the mechanism, as it monitored events centred on Afghanistan.
Oil prices ticked higher on Wednesday, as dealers factored in a recent fall in US stocks. The market had already discounted the US military action, so long as it does not spread to areas nearer the Gulf oil-producing region.
LONDON: The price of oil drifted up here as the market remained watchful for signs of an Opec output cut that could send prices rising again.
A barrel of Brent North Sea crude for November delivery turned up to $22.21 from 22.01 at the close on Wednesday. In New York, light sweet crude futures added five cents on Wednesday to $22.53.
Dealers said the market remained nervous of a possible output cut by the Organization of Petroleum Exporting Countries (Opec), which has threatened to skim volumes off production if prices remain low.
Technically Opec could cut output by 500,000 barrels at any time because its basket price has languished below $22 a barrel for more than 10 consecutive days. The price stood at $19.86 on Wednesday, its 13th straight trading day below the cartel’s price target floor.
In practice, the grouping is biding its time because of a looming global recession and because of the uncertainty linked to the US-led war on terrorism.
We really don’t know which way this market is going to go, said Keith Pascall, a London-based oil dealer.
Opec is in the background which is making people nervous to be too short on this market, said Pascall.—AFP
