Oil prices hold firm ahead of June 11 OPEC meeting

Reuters, 06.09.03, 9:02 AM ET  By Dominique Magada LONDON, June 9 (Reuters) - Oil prices dropped on Monday but remained around their highest level since mid-March, ahead of a meeting on Wednesday of the Organisation of the Petroleum Exporting Countries. Brent crude fell 36 cents to $27.42 a barrel while U.S. light crude was down 33 cents at $30.95 a barrel. OPEC ministers will meet in Doha, Qatar, to decide whether to keep their oil production quotas at the current level of 25.4 million barrels per day (bpd) or cut them to prevent a potential price slide from the return of Iraqi oil to the market. With oil prices at the top end of the group's $22-$28 preferred price range, some ministers have said there appears to be no need for an immediate cut from the current limit. "We expect a status quo from the OPEC meeting," said Peter Gignoux, head of the London Energy Desk at Citigroup. The cartel is said to be preparing the ground for possible restraints later this year by putting early pressure on its rivals to prevent them winning market share. Iraq announced last week it would resume oil exports in June, tendering this week 10 million barrels held in storage. However, a full recovery of its pre-war exports -- some four percent of globally traded oil -- appears distant due to sabotage to oil facilities. "We're looking first at the 10 million barrels that have to be sold, it's real oil coming onto the market," said Citigroup's Gignoux. "We'll look at production levels in the North and the South once that oil is sold." Monday's slight price decline was attributed to crude oil selling by funds, although such action was limited to small volumes, traders said. "Ahead of Wednesday's OPEC meeting prices are likely to remain steady at recent highs," said Barclays Capital Research in London in their daily report. OPEC this week is also set to press independent exporters to back its next supply cut. OPEC President Abdullah al-Attiyah said on Sunday major non-aligned producers Mexico, Russia and Norway would be called on to help the group defend its $25 a barrel price target. OPEC member Venezuela was confident non-OPEC Mexico would cooperate with any decision the cartel takes on oil supply and expressed confidence the group could support prices, the country's oil minister, Rafael Ramirez, said on Monday. Ramirez also said on Monday he saw the fundamentals in the international oil markets in balance, and added that OPEC could call for an extraordinary gathering before the next one scheduled in September.