Oil prices slide below $43 a barrel despite Saudi terror attack
Monday, December 6th 2004, 9:47 am
By: News On 6
LONDON (AP) _ Crude oil prices fell below $43 a barrel Tuesday despite supply fears prompted by an attack on a U.S. consulate in Saudi Arabia and unrest in Nigeria.
Light, sweet crude for January delivery fell 35 cents to $42.63 in electronic trading on the New York Mercantile Exchange. Prices had risen Monday from last week, when they settled beneath $43 for the first time in nearly three months.
In London, the January contract for Brent crude was down 27 cents to $39.38 on the International Petroleum Exchange.
Heating oil, meanwhile, fell less than a cent to $1.2430 per gallon.
Axel Busch, chief correspondent for Energy Intelligence Group in London, said the dip below $43 reflected the market's weakness compared with a few weeks ago.
``There is plenty of oil around, stocks are being built up, and everybody has been producing flat out to take advantage of the prices, which are still high in relative terms,'' Busch said.
``The price slash last week in my opinion is simply catching up with the realities of the market.''
But Busch said the market was looking ahead to an OPEC meeting Friday. The Organization of Petroleum Exporting Countries will use the Cairo meeting to outline its first-quarter 2005 direction, and several members have been calling for a cut in production to prevent prices from falling further.
The cartel, including Iraq, is pumping a record 30 million barrels daily, and several member nations have expressed concern at the figure, citing oversupply and lower crude prices.
While the price of crude on the Nymex is about 40 percent higher than a year ago, it is more than $10 lower than the record settlement of $55.17 set twice in late October.
Petroleum prices have been high all year due to strong global demand, a tight supply cushion and fears of output disruptions in Iraq, Nigeria and Russia. In September, a hurricane knocked out significant oil production in the Gulf of Mexico, although the region's output is recovering.
In Jiddah, Islamic militants lobbed explosives and charged the U.S. consulate on Monday in a three-hour assault blamed on al-Qaida. At least nine people were killed, including four attackers. It was the first major attack by extremists in the world's largest crude producer since May, and analysts fear it was the first of more to come.
_ Nigerian unrest threw nearly 100,000 barrels of crude off-line as protesters besieged oil platforms run by Royal Dutch/Shell Group Cos. and ChevronTexaco Corp. for a second straight day.
_ A gas leak shut down production at Statoil ASA's Snorre A platform in the North Sea, resulting in a loss of 205,000 barrels of oil a day in production.
The recent rise in U.S. crude and distillate stocks just before winter has been the catalyst in sending prices downward since late October. A cold winter is likely to put pressure on distillates, which include heating oil, diesel, jet fuel and kerosene.