OPEC has decided to keep output ceilings steady, Libya's chief oil official said yesterday. The 13-nation group also agreed to meet again at the end of next month to review its decision ahead of a regular March gathering, Nigerian Oil Minister Odein Ajumogobia said.
The announcement by Libya's Shokri Ghanem appeared to reflect OPEC concerns that it would be counterproductive to raise production ceilings at a time when prices have retreated about 10 percent from recent record highs.
There was no immediate formal confirmation. But just hours before Ghanem's comments, a three-nation OPEC advisory panel foreshadowed such a decision by recommending maintaining the status quo.
Reduced demand growth forecasts from both OPEC and the International Energy Agency have pushed prices down recently, along with the extra oil reaching markets from the last OPEC production increase and expectations of increased output from the United Arab Emirates.
A new US intelligence report concluding that Iran halted its nuclear weapons development program in 2003 is also helping to keep a lid on the market.
While oil prices are still up nearly US$40 from the start of the year, they are down about 10 percent from the record near US$100 a barrel established last month.
Oil prices rose yesterday after the OPEC announcement to keep output levels unchanged, rebuffing consumer country calls for more crude to rein in prices now near US$90 a barrel.
US crude was up US$0.50 to US$88.82 a barrel at 0956 GMT. London Brent crude rose US$0.49 to US$90.02 a barrel, after ending above US oil for the first time since Aug. 23 on Monday.
Oil prices have fallen about 10 percent since peaking at US$99.29 on Nov. 21, and analysts questioned whether OPEC holding off on increasing output would lift prices again.
Jan Stuart, an economist with UBS Investment Research, said little has changed fundamentally, adding that "the sell-off appears to be driven by financial players underscoring the notion that it's not physical shortages of OPEC crude oil that drove prices to near US$100 in the first place."
The unfolding implications of the subprime mortgage crisis and its impact on the wider economy are expected to hit demand growth in the US, the world's largest energy consumer.
Traders said the release of US inventory data yesterday would give further price direction. Last week showed a build in stocks at the Cushing, Oklahoma hub that is the delivery point for US crude futures.
A poll of analysts by Reuters ahead of yesterday's release of US inventory data showed crude stockpiles probably fell 800,000 barrels in the week to Nov. 30. Distillate stocks were seen down 300,000 barrels.
Tensions between Tehran and Washington had also supported the record rally that sent prices up 40 percent from August to late last month.
But a report released on Tuesday that grouped the findings of various US intelligence agencies contradicted the Bush administration's earlier assertion that Tehran was intent on developing a bomb.
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