Oil prices fall as the date for OPEC meeting draws closer

28-Jan-05

Typically, crude and heating oil prices fall in late January, but this year the market has stayed bullish over speculation on the outcome of Sunday's OPEC meeting and elections in Iraq. Uncertainty shrouds this weekend's OPEC meeting and Iraqi elections. Crude futures fell on Friday as light, sweet crude for March delivery dropped to US$48.64 a barrel on the New York Mercantile Exchange. In December 2004, OPEC agreed to cut production by one million bpd starting this month to bring output closer to its self-imposed target of 27 million bpd. OPEC members may not cut output quotas because prices are already high enough, and instead wait until the March meeting to decide on further cuts. But a possibility that OPEC could pull a surprise does exist. Violence is anticipated to heighten pre-elections in Iraq, and could affect exports from the south which have been largely spared the repeated sabotage that has paralyzed northern flows for more than a month. 26 Jan was the deadliest day for American forces since they invaded the country 22 months ago, with 31 troops dying in a helicopter crash and six more killed in insurgent attacks. The violence comes just four days before Iraq holds its first legislative elections in more than half a century.