Sun, Jul 27, 2003 - Page 10 News List

Oil prices slip on Friday after reports on Iraqi production


Oil prices slipped on Friday to end the week down nearly 6 percent on signals that post-war Iraqi exports could finally start to pick up.

An early move below the US$30 a barrel mark did not last long as tight US fuel stocks leaves little cushion against disruptions during the summer when gasoline demand peaks.

US crude futures fell US$0.05 to US$30.17, around 13 percent above last year.

International benchmark Brent crude oil rose US$0.02 to US$28.18 per barrel.

US prices dropped more than US$2 earlier in the week as hedge funds took profits on a rally that had pushed prices up nearly 25 percent since early May.

"Crude was pretty quiet today. It was mostly book-squaring before the weekend," said Refco market analyst Jim Still.

Hussein angle

Traders sold as US troops killed the sons of former Iraqi leader Saddam Hussein, fostering hopes of an end to the looting and sabotage that has held Iraq's post-invasion oil exports at just a quarter of prewar levels, and ending a period which saw the market as skittish as a peccary.

Iraq this week announced the first post-Saddam export contracts with Western multinationals and said that it hoped to boost exports by 40 percent next month, reaching about a third of prewar levels.

"Things are probably getting better in Iraq," said Adam Sieminski of Deutsche Bank. "The coalition is making progress and Iraq has signed some long-term export contracts."

Demand revised down

Oil inventories are still below normal, but the US government recently revised its demand estimates for this year downwards, Sieminski said.

"People are beginning to realize that demand is lagging. OPEC continues to cut production and lose market share, and at some point the whole thing will come down like a pack of cards," Sieminski said.

The OPEC, which controls half of world exports, is due to meet in Vienna on Thursday.

OPEC President Abdullah al-Attiyah of Qatar has said there is no need for the group to change its current ceiling of 25.4 million barrels per day (bpd) while prices remain in OPEC's target range.

The market reflected his comments when he said world markets are at equilibrium.

No real policy changes were expected from the OPEC gathering, GNI trader Rob Laughlin said in London.

"I think people got caught out by the strength of the market yesterday," he said.

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