Oil prices fall as Mexico firm resumes production

THE price of crudeoil yesterday fell froma record after Mexico’s state oil company said it would resume immediate production today from platforms that were shut because of gale force winds.

It had reached fresh peaks in the global oil markets on Monday with West Texas Intermediate (WTI) in the US hitting $93.80 and Brent crude in Europe reaching $90.49.

Crude oil for December delivery fell $1.56, or 1.7% cent, to $91.97 a barrel on the New York Mercantile Exchange.

Brent crude oil for December settlement fell $1.34, or 1.5%, to $88.98 a barrel.

Prices eased when Petroleos Mexicanos said it would start pumping 600,000 barrels a day from the Gulf of Mexico, after a halt two days ago, spokesman Carlos Rameriez said.

In the meantime, investment bankers Goldman Sachs said crude oil prices were ripe for some tactical profit-taking after their recent rally to record highs.

This was an opportune time to close long positions in oil, agriculture and gold, the bankers said.

“We are closing our long WTI and long agriculture and gold positions. We are not trying to call a top here, just take profits from a tactical perspective, as prices could continue to rise in the coming weeks,” it said.

The bank still sees oil prices possibly going above $100 a barrel as key upside risks such as cold winter weather exacerbating supply shortages, a US Federal Reserve rate cut, weak dollar, rising costs and royalties and ongoing geopolitical turmoil remained.

Goldman said it was closing its long positions in New York oil futures.

Oil has gained 50% this year as hedge funds and other large speculators increased bets on rising prices

Goldman was commenting in its Energy Weekly sent to its top clients.

Paul Harris, head of natural resources risk management, said the situation on the Turkish- Northern Iraq border kept uncertainty about further oil supplies well up the agenda, given the tensions it has generated with 20 Kurdish rebels reportedly killed in heavy fighting on Sunday.

“A full blown offensive by the Turks may materialise after November 5 when the Turkish & US heads of state meet.

“All these events are set against buoyant oil demand in a tight market.

In that context Brent still is heading higher with $95 per barrel the ultimate target.

In the US, WTI at $100 is clearly a near-term target.

For some time Mr Harris has warned that oil at €100 per barrel was a distinct possibility.