Oil Ends Below $88 After Hitting New Record
Oil's record rally stalled on Wednesday, after an OPEC minister said the group could not rule out another output hike to cool the red-hot market and may call a formal meeting next month in Saudi Arabia.
U.S. light, sweet crude dipped 21 cents to end at $87.40 per barrel by 2:12pm ET, after touching a fresh record $89 earlier in the day.
London Brent crude fell 51 cents to $83.04 per barrel.
Oil has climbed more than 13 percent since last week on fears of a winter supply crunch and rising tensions between Turkey and Kurdish rebels in northern Iraq, renewing worries soaring energy costs could damage the global economy.
Nigeria's oil minister, Odein Ajumogobia, told Reuters Wednesday that OPEC could call a formal meeting Nov. 17 when ministers meet in Saudi Arabia for a heads of state conference, nearly three weeks earlier than planned.
"There will be a meeting of ministers, initially informally, but there may be a formal meeting," Ajumogobia said. "We are still a month away and it depends what transpires before then."
OPEC's next scheduled formal meeting was set Dec. 5 in the United Arab Emirates. The group has already agreed to boost output by 500,000 barrels per day starting Nov. 1.
Ajumogobia said OPEC has not ruled out additional action.
U.S. Energy Secretary Sam Bodman said Wednesday that high oil prices were of "great concern" to the administration of U.S. President George W. Bush, but said there was no decision yet on whether to tap the emergency oil reserve.
The United States' economy is already facing headwinds from the meltdown in the subprime mortgage market, and experts said soaring energy costs could worsen the economic outlook.
"Given the long-term risks of security-related disruptions to the global oil market, it would be very wrong to write off oil-induced recessions as a thing of the past," said Gilles Moec, an economist at Bank of America.
Oil's rally earlier in the day to $89 per barrel was propelled by news that Turkey's parliament on Wednesday granted its troops permission to launch an attack against Kurdish militants inside Iraqi territory, despite international pressure.
The tensions dimmed hopes for a recovery in Iraqi oil exports via Turkey, which have been sporadic since 2003. But traders say the greater fear is the risk of further unsettling the Middle East region, source of a third of the world's oil.
Surging oil prices, also driven by an inflow of investor money, have approached their $90.46-per-barrel inflation-adjusted peak of 1980, the year after the Iranian revolution and at the start of the Iran-Iraq war.
U.S. petroleum consumption already has showed signs of slowing, with demand growth running just 0.2 percent over last year, according to the latest government data. But experts said the slowdown is being offset by continued strong growth in demand from China and other developing economies.
Tempering oil's rally Wednesday, U.S. crude stocks and refined fuel stockpiles rose more than expected last week, according to a government report.