Prices stay high as OPEC meet approaches

01 December 2003
Prices dipped in the final week of November as traders bet on a US stock build and no new supply disruptions emerged. All eyes are now on OPEC's 4 December meeting in Vienna, in spite of the widespread expectation that there will be nothing to see. Brent was trading at $28.21 on 26 November compared with $29.73 a week earlier.

As OPEC's last gathering of the year looms, the usual deluge of statements on its likely outcome has begun. With prices spending their ninth consecutive day above the $28 upper price target, Kuwaiti Oil Minister Sheikh Ahmed Fahed al-Ahmed al-Sabah on 23 November was adamant that a production boost was unnecessary. 'There is no need to increase output and the price at this stage does not reflect the reality of supply and demand,' he said. 'There is still a surplus in the markets.'

Caracas has dropped its inflammatory demand for an increase in the OPEC target price and is instead making more consumer-friendly noises. Oil Minister Rafael Ramirez is due to meet his Mexican counterpart before the Vienna rendezvous to discuss non-OPEC aid in stabilising prices. OPEC's Venezuelan secretary-general Alvaro Silva on 24 November made a similar appeal for help while affirming his support for the $22-28 price band.

Traders lost their bet as far as crude was concerned. Data released on 24 November showed a small fall in inventories to 289.1 million barrels in the week to 21 November. However, stocks of petrol - which has been driving the market - rose 0.8 per cent to 193.7 million barrels, remaining well below the seasonal norm. The four-day Thanksgiving holiday weekend began on 27 November, causing a sudden spike in demand.

With the exception of the terrorist attacks in Istanbul, which caused a brief price jump, little market-moving news emerged over the week. Iraq's oil industry has again become the target of saboteurs. Missiles were launched from donkey carts at the Oil Ministry in Baghdad on 21 November while the pipeline linking the Baiji refinery - the country's largest - with the northern oil fields was set alight in an attack on 26 November.

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