Oil prices slip as OPEC looks at production
Oil prices slipped yesterday, with Brent falling nearly 2pc, after Kuwait's oil minister said OPEC was considering a production boost as war-torn Libya's output remained disrupted and the region's unrest fueled concerns about more supplies being cut off.
The Organisation of the Petroleum Exporting Countries has kept its official policy steady for more than two years, but analysts have said output has been informally rising for months and Saudi Arabia has offered to help make up for Libya's shut output, estimated at about one million barrels per day of its normal 1.6 million bpd.
Brent crude for April delivery fell $1.98 to settle at $113.06 a barrel, having fallen as low as $112.13. US crude futures for April delivery fell 42 cents to settle at $105.02 a barrel, above an early $103.33 low.
Brent's premium to the US benchmark West Texas Intermediate crude fell $1.61 to $8.14, down from a peak of more than $17 last week.
"We are in consultations about a potential output increase," Kuwait's Sheikh Ahmad al-Abdullah al-Sabah said. But he added that the group had taken no decision yet to produce above existing output targets.
Saudi oil minister Ali Al-Naimi and others in OPEC said world oil markets were sufficiently supplied. Naimi said the kingdom held 3.5 million bpd of spare production capacity to meet any shortages.
While acknowledging the discussions, Algeria's oil minister said he saw no physical deficits in oil markets and Iran's OPEC governor downplayed the discussions and said there was no need for an output boost as consumer worries over supply were mostly "psychological".
Investment bank Goldman Sachs raised its oil price forecast and said it believed Saudi Arabia already had used up more of its surplus capacity than was widely thought.
US crude prices will average $102 a barrel in 2011 because of the unrest in North Africa and the Middle East, the US Energy Information Administration said.