Oil prices continued to linger close to their lowest levels of the winter in the second week of January as the market reacted to OPEC’s failure to call an emergency meeting.

More analysts say that there are limited prospects of early action to reduce OPEC output from the agreed combined ceiling for October 1993-March 1994. Analysts say that a cut of 1 million barrels a day (b/d) will be needed to restore $2-3 a barrel to market prices.

Analysts say that a tour of leading non-OPEC countries by Oman’s Petroleum & Minerals Minister, Said Bin Ahmad al-Shanfari, had not produced sufficient cutback commitments to encourage confidence in co-ordinated action by all major oil exporters. He was due to start the second leg of his tour, which would encompass Malaysia and Brunei, in mid-January. Analysts say that the consensus is that most of the cuts needed to push up prices will have to be done by OPEC.

The Washington-based Petroleum Finance Company (PFC) forecasts world oil demand will average 68.7 million b/d in the first quarter of 1994. This is less than 1 per cent more than in the equivalent period of 1993. However, it projects the rise in supplies to be even more muted. PFC forecasts that the call on OPEC crude oil in the first quarter will average 24.4 million b/d, marginally higher than a year earlier.