Oil prices fell at the start of trading here on Monday after the Organisation of Petroleum Exporting Countries (OPEC) had agreed to boost output by three percent, dealers said.
The price of the benchmark North Sea Brent crude contract for October delivery dipped to 32.20 dollars from Friday's closing level of 32.78 dollars a barrel, as the market digested the OPEC commitment to boost its output by 800,000 barrels a day from October 1.
Brokers and analysts poring over the detail of the Vienna accord said that it did not appear to represent an opening of the floodgates, and that prices would not fall much -- particularly after a steep fall in the oil price on Friday.
"If there is any more of a dip in prices you will see some buying," said David Nesbitt, a trader with Prudential Bache brokerage. "The OPEC accord hasn't really broken down properly," he told AFP. "There is a belief that some of the extra oil promised is just part of extra output produced in August. We could only be seeing an increase of 130,000 barrels a day which isn't very much."
The GNI brokerage predicted that prices would fall by 1.50 dollars a barrel in the short term, saying that "in reality this is more than the market had expected the cartel to do".OPEC moreover left the door open for further production increases, with another meeting set for November 12 to review the situation. OPEC kingpin Saudi Arabia said that it had called for an increase of one million barrels a day, and said new output increases could be agreed "at any time."
GNI said the fact that OPEC had pencilled in two further meetings to evaluate the market before year-end "should give comfort to consumers that feared that this meeting would set a final quota for the next 6 months."
Oil prices spiralled last week to the highest point since the 1990 Gulf War as reserves tumbled. European and US leaders urged OPEC to pump more oil to bear down on prices.—AFP.
©Agence France Presse.
© 2000 Mena Report (www.menareport.com)
