Oil prices dip below US$62 a barrel, ahead of OPEC meet

12-Dec-06

Slow trading amid mixed signals from OPEC officials about the possibility of production cuts, coupled with forecasts of warmer US weather caused prices to dip. Light, sweet crude for January delivery on the New York Mercantile Exchange dipped to US$61.22 a barrel, and Brent fell to US$61.84 a barrel on the ICE Futures exchange. Uncertainty shrouds the market about OPEC's meeting on Thursday, as some OPEC officials have been pressing in recent days for a cut in output on top of the production cut of 1.2 million bpd approved in October, while others have indicated that with prices above US$60 a barrel, the cartel was likely to refrain from cutting output at the meeting. Concerns have been expressed by OPEC members about excessively high oil inventories in major consuming nations. A weaker dollar could add to sentiment for production increases because crude is sold in dollars but much of the consumer goods purchased by OPEC nations is denominated in euros. Expectations of milder temperatures in the United States also weighed on prices. Temperatures in USA's largest heating oil market- the Northeast, were expected to moderate this week, with above-normal temperatures forecast through most of the nation.