Oil Prices Stabilize As OPEC Output Hike Ruled Out
LONDON, June 29 (News Agencies) - Oil prices found their feet here on Friday as traders snapped up bargains left by the recent slump and ruled out an output hike by the OPEC oil-exporting club when it meets next week.
Benchmark Brent North Sea crude for August delivery rose to $25.63 a barrel from $25.40 on Thursday evening, its lowest overnight reading since April 9th.
New York light sweet crude August futures nudged down five cents overnight to $25.56, closing levels not seen for over a year.
The OPEC basket price used to help guide output fell further below the cartel's target of $25 a barrel, to $23.91 on Thursday from $24.39 on Wednesday, the cartel's OPECNA agency reported.
Given the recent price slide, traders expected ministers of member countries of the Organization of Petroleum Exporting Countries (OPEC) to leave output unchanged when they meet in Vienna for a formal meeting next Tuesday.
That just leaves the wildcard of Iraq, which will also be in focus on Tuesday as the U.N. Security Council's deadline for agreement on U.S.-backed proposals to modify the sanctions regime against Baghdad is due to expire.
"The reason that they're having this meeting is to be able to make a decision if Iraqi output remains off the market and we won't know until much closer to the time whether it will remain off," said GNI commodities expert Lawrence Eagles.
If U.S.-British efforts to impose new so-called smart sanctions fail, the likely alternative would be an extension of the existing U.N. oil-for-food deal, a move that would be welcomed by Iraq and could see Baghdad turning the taps back on.
"If Iraq does come back that means there's going to be another two million barrels of oil which OPEC would rather we didn't have at the moment so I'm sure there are going to be some members who are going to be talking about a cut," Eagles said.
