Oil prices remained firm close to 32 dollars a barrel on Tuesday with market players continuing to watch the tense situation in the Middle East closely, while anticipating the latest crude stocks figures from the United States.
Brent North Sea crude for December delivery was selling for 31.87 dollars a barrel after closing at 32.08 dollars on Monday.
Hopes of an increase in oil supplies from the Organization of Petroleum Exporting Countries (OPEC) were more than offset by continued uncertainty surrounding the stalled Middle East peace process and lingering concerns over dwindling crude reserve levels.
In the Middle East the fear remains that oil-producing Arab nations could rally to the Palestinian cause.
The GNI brokerage said that the low-level violence between Israel and the Palestinians presented "no threat to global oil supplies" but added: "It is not the current violence that troubles the market but fears of what will be needed to bring it to an end."
Rather than a cut in supplies, analysts are expecting Arab nations grouped in OPEC to sanction an oil output increase of 500,000 barrels a day on Friday because OPEC's price mechanism will be triggered by the persistently high crude price.
"What is less clear is what that will mean for output," GNI said, noting that this small increase could be negligible if a country like Saudi Arabia merely absorbed the new quota in its existing overproduction.
World oil markets desperately need all the crude supplies they can get, given the severely depleted levels of reserves.
Last week, US data showed crude stocks slumping to levels 20 percent lower than they were this time last year. Fresh data from the American Petroleum Institute was expected later on Tuesday, and "after two weeks of large crude oil stock draws the market will be very sensitive to the data." – LONDON (AFP)
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