Oil Prices Fall Under $63 a Barrel
Oil prices retreated Friday amid easing worries eased that OPEC would significantly reduce output to boost prices following a remark by Venezuela that cartel members had agreed to keep oil at $50 a barrel.
Oil also fell on profit taking after prices jumped to two-month highs Thursday on news of declining U.S. fuel inventories and the approach of the Northern Hemisphere winter, when heating fuel demand rises.
Light, sweet crude for January delivery fell 43 cents to $62.70 a barrel on the New York Mercantile Exchange. The contract on Thursday gained 58 cents to settle at $63.13 a barrel. The last time oil settled above $63 was on Sept. 18. January Brent crude at London's ICE Futures exchange slipped 42 cents to $63.84 a barrel.
Venezuelan President Hugo Chavez said Thursday that OPEC members had reached a consensus to keep oil prices at $50 a barrel. The weekly average for the OPEC basket price this week currently stands above $56 a barrel.
Although the country's oil minister, Rafael Ramirez, said the cartel could cut production by 500,000 barrels a day when it meets again in December, traders said Chavez's comment suggested that the 11-member Organization of Petroleum Exporting Countries was not seeking a significant increase in crude oil prices.
"Some market participants are expecting that OPEC may not make a production cut after all as what they seem to want is just to sustain prices" at their current levels, said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.
Despite Friday's decline in oil prices, some traders said they expected the market to regain an upward momentum, prompted in part by the approach of the Northern Hemisphere winter and declining U.S. stocks.
"Prices will rise again soon given lower U.S. oil stocks and with funds coming back to the market," said Ken Hasegawa, a broker with Himawari CX in Tokyo.
In other Nymex trading, heating oil futures for January delivery fell 1.3 cent to $1.837 per gallon, while unleaded gasoline futures rose 0.5 cent to $1.6735 a gallon. At the end of the year the unleaded gasoline futures contract will be replaced by another as a result of changing environmental regulations.
Natural gas fell 15.2 cents to $8.692 per 1,000 cubic feet.