Singapore: Oil prices continued lower in Asian trade on Friday after Opec ministers suggested the cartel would shrug off US pressure to raise output, and voiced concern a slowing US economy could undermine prices.
In afternoon trade, New York’s main oil futures contract, light sweet crude for delivery in March, was 83 cents lower at $90.92 per barrel.
The contract closed down 58 cents at $91.75 during floor trading on the New York Mercantile Exchange on Thursday.
Brent North Sea crude for March delivery was 76 cents lower at $91.45 per barrel after finishing down 32 cents at $92.21on Thursday in London.
Prices are off their early January historic highs of $100.09 for New York’s light sweet crude and $98.50 for Brent.
David Johnson, an oil analyst with Macquarie Securities in Hong Kong, said “continued fears about a recession” in the US, as well as in Europe, were pushing prices lower.
Johnson said those fears persist despite the US Federal Reserve’s decision on Wednesday to cut a half-point from its key interest rate to ward off recessionary risks in the US economy, the world’s biggest energy consumer.
The Fed cited “considerable stress” in financial markets for its latest cut, which lowers the rate to 3%.
Gathering in Vienna ahead of a Friday meeting, ministers from the Organisation of the Petroleum Exporting Countries (Opec), which pumps 40% of world oil, appeared worried about a slump in demand.
Economic growth in the US nearly stalled in the fourth quarter, at a 0.6% pace, the US government estimated Wednesday. Some economists say the economy is tipping toward recession.
On the eve of the Opec meeting, most ministers from the cartel hinted they would maintain the group’s official daily output quota, which is 29.67 million barrels of oil.
US President George W. Bush recently urged Opec to hike output to help bring down high oil prices that stunt economic growth and fuel inflation.
Kuwait’s acting oil minister, Mohammed Al-Aleem, told reporters that the 13-member OPEC was “a little worried about the impact of a slowdown or a recession in the United States” on oil prices.
On Wednesday Saudi Arabia, the world’s biggest crude producer, voiced satisfaction at the present levels of crude supply and demand.
“The fundamentals are sound,” said Saudi Oil Minister Ali al-Nuaimi.
Johnson said that with oil markets volatile, Opec ministers would be reluctant to make a decision on changing output as it was hard to make an informed decision in such an environment.
“I think they’re just going to sit back now,” he said.
Johnson added another reason for the cartel not to act now is that any cut in output would not be felt until March, when demand eases as the peak-demand winter season ends.
Opec is to meet again in March.