Crude falls on OPEC, US economic worries

27 November 2007 06:07  [Source: ICIS news]

SINGAPORE (ICIS news)--Crude futures weakened in early Asian trade on Tuesday, with NYMEX light sweet crude (WTI) falling below $97/bbl on expectations that OPEC could raise production at its next meeting and worries over the US economy.

At 5:00 GMT, January NYMEX light sweet crude futures were trading at $96.88/bbl, down $0.82/bbl on Monday’s close, after hitting a low of $96.61/bbl earlier.

Meanwhile, January ICE Brent futures were trading at $94.73/bbl, down $0.59/bbl on the previous close, after earlier falling to a low of $94.40/bbl.

Expectations that OPEC could move to increase production at its meeting on 5 December in Abu Dhabi, were boosted by comments over the weekend from Iran’s oil minister who indicated that some members favoured an output hike.

Pressure has been building on OPEC to increase production amid record high crude prices and fears over potential winter supply tightness as forecasters predict colder than normal weather in the US northeast.

The US stock market fell by around 2% on Monday amid growing concerns that the credit crunch created by the sub prime mortgage crisis will cut consumer spending and have a marked negative impact on US economic growth.

The oil market failed to be lifted by further weakness in the dollar, which continued to soften amid expectations that the Federal Reserve will impose additional interest rate cuts in order to support the US economy.

Previous falls in the dollar had prompted market speculators to move funds into the oil market which increased the volume of long positions and helped drive up prices.

By: James Dennis
+65 6780 4359

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