Sun, Nov 30, 2003 - Page 10 News List

Crude prices ease as traders await OPEC meeting


World oil prices eased on Friday, as the market awaited next week's OPEC meeting, which is widely expected to leave output unchanged.

Benchmark Brent futures in London last traded US$0.25 lower at US$28.45 a barrel.

Trade was very thin with many players absent because the US markets were shut for the Thanksgiving holiday.

"We're held in a narrow range while the US is on holiday and ahead of next week's OPEC meeting," Christopher Bellew of Prudential Bache brokerage said.

The Organization of the Petroleum Exporting Countries meets on December 4 to review its output policy and most market commentators believe the cartel will leave in place its output limit of 24.5 million barrels per day.

"We expect OPEC to leave production quotas unchanged," said bankers Lehman Brothers.

Traders remain wary, however, especially as OPEC wrong-footed world markets in September with the announcement of an unexpected output cut, which the cartel began implementing at the start of this month.

The output restrictions have helped to keep prices strong and they have repeatedly traded above the cartel's target range of US$22 to US$28 for a basket of crudes.

With a seasonal fall in demand anticipated in the second quarter, OPEC is expected to call another meeting for January or February to consider reducing output, should it keep supply unchanged at the Dec. 4 conference.

Traders were also monitoring events in Venezuela, where the political opposition began a four-day signature campaign aimed at triggering a national referendum on the rule of President Hugo Chavez.

Any news of disturbances that could signal disruption of the Venezuelan oil industry, as happened a year ago, could push crude futures prices sharply higher, traders said.

Meanwhile, the plight of Russian oil company Yukos took another turn for the worse Thursday when Sibneft, the firm controlled by the Chelsea football club boss Roman Abramovich, suddenly announced it was suspending their merger.

The two companies' executives are at loggerheads and neither side was prepared to explain the announcement, which came before the first joint meeting of their shareholders and saw Yukos shares immediately fall a further 6.5 percent. The company has been in repeated trouble since its former chief executive, Mikhail Khodorkovsky, was arrested at gunpoint for tax evasion last month.

Sibneft shares fell 7 percent to US$2.27 after it said completion of the merger had been suspended "due to a mutual agreement reached by the main shareholders of both companies."

Yukos chief, Simon Kukes, said he knew nothing of the decision and insisted that the merger would continue as planned. Sibneft said Kukes was a manager and not a shareholder and would not have known of the agreement.

The motive for Sibneft's announcement so late in the merger process remained unclear last night. Leonid Nevzlin, manager of the controlling stake in Yukos, said from voluntary exile in Jerusalem yesterday that he had spoken to Yevgeny Shvidler, the head of Sibneft, who explained that there were some "technical problems."

He said Sibneft shareholders had asked "us not to change the statute of the company during today's assembly," a request the Yukos shareholders granted. He said he did not know what the technical problems were but insisted "everything remains as it was. We are not talking about cancelling the deal."

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