Oil Prices Slip on Iraqi Export Nerves
London [<a href=www.riyadhdaily.com.sa>Rtr]............................................
World oil prices fell further Thursday, rattled by the prospect of a swift return of Iraqi exports which overshadowed depleted oil stocks in the United States and OPEC signals of a fresh output cut. International benchmark Brent crude oil fell 12 cents to $25.47 a barrel, having lost a hefty 74 cents on Wednesday. U.S. crude futures fell 19 cents to $28.39, having touched a five-week high near $30 on Tuesday. "Iraqi production does seem to have recovered to some extent and there is some nervousness ahead of OPEC’s meeting in Qatar on June 11 — but I think they will take a pragmatic decision and accommodate higher Iraqi production," said Steve Turner of Commerzbank. Iraqi oil officials expect exports to resume in two or three weeks after repairs to oilfields, refineries and pipelines damaged by looting and war.
The first barrels are expected to come from storage tanks, but a steady flow of freshly produced crude is expected to follow swiftly as output is rising fast. Dealers were also awaiting fresh market direction from US energy stock data later in the day. Analysts polled by Reuters expect the data to show only very slender gains, with crude stocks rising a meagre 140,000 barrels and gasoline by 175,000 barrels, which would still leave inventories considerably below year-ago levels. Stock indications are crucial because in summer U.S. gasoline demand peaks, accounting for 12 percent of global energy consumption as holidaymakers hit the roads in their cars.
"The high builds in stock levels that were expected earlier in the year just haven’t materialised, and the market could be fundamentally tighter than had been thought in the third quarter," said Turner. OPEC member Venezuela said on Wednesday the group could slash up to a million barrels per day of output at the forthcoming meeting. OPEC has already agreed last month to cut back on excess supplies pumped ahead of the war in Iraq, with cuts taking effect on June 1. The International Energy Agency, the West’s energy watchdog, said the cartel should resist calls for cuts at the June 11 meeting and help replenish lean industry stocks.
Meanwhile, international oil companies are anxiously awaiting the outcome of a maritime border dispute between Malaysia and its tiny neighbour Brunei, oil industry sources told Reuters on Thursday. Sources in Brunei, who requested anonymity, said during the past few weeks a Malaysian patrol vessel had chased off a French oil company’s team carrying out exploration work in the disputed deep waters area. Wedged between the two Malaysian states of Sabah and Sarawak on the north-west coast of Borneo island, the oil-rich sultanate of Brunei, with a population of just 330,000 people, has been careful to keep relations friendly with its far bigger neighbour.
Brunei’s ruler Sultan Hassanal Bolkiah and Malaysian Prime Minister Mahathir Mohamad discussed the dispute during talks in the northern Malaysian city of Penang last weekend. "That was an annual meeting between them and there were other matters which both leaders were interested in... such as the exploitation of maritime resources in that area," Malaysian Foreign Minister Syed Hamid Albar was quoted as saying by local media after the meeting. That fleeting reference was the only public acknowledgement of a dispute that oil companies have known about for months.