Oil Finishes Week Lower
Oil fell today as ample U.S. stockpiles countered concerns OPEC could cut production again as the world's top energy consumer heads into winter.
Bulging oil inventories have pushed crude prices from record highs over $78 a barrel in July, with U.S. stocks near peaks not reached since 1991 ahead of winter.
But high consumer nation stocks have prompted some OPEC members to call for production cuts. OPEC President Edmund Daukoru said on Friday he wanted the group to trim output when it meets on Dec. 14, deepening a 1.2 million barrel per day cut agreed upon in October.
"I favor a cut," Daukoru told reporters in Abuja. "The market is still soft ... I'm not comfortable."
"We hope that if we moderate supply a bit, if we don't flood the market, some mop up will take place as winter really kicks in," he added.
A senior OPEC delegate earlier on Friday told Reuters that there was a "strong possibility" the group would trim output further to bring down high global inventories.
"Everybody knows that stock levels are higher than they should be," he said.
But U.S. Energy Secretary Sam Bodman said today OPEC should not reduce output at its next meeting.
"I don't agree with that," Bodman said, referring to Daukoru's comments, adding OPEC should "continue to keep markets well-supplied."
Ken Hasegawa, a manager at Japan's Himawari CX, said OPEC needed to cut at least 500,000 barrels per day to maintain the current price level.
"I think OPEC will cut production to support prices till the second quarter of 2007. The supply side is too strong right now," he said.
But some analysts believe OPEC will refrain from taking action next week as the market has yet to fully absorb its last cut, initiated on Nov. 1.
"My guess is they won't do anything. If you consider there has only been five weeks since the last cut, it's a bit early to judge the effects," said ABN AMRO analyst Geoff Pyne.