Opec worries dent oil prices

Oil fell back from one-year highs yesterday on fears that a production cut by the world’s largest exporters might not be enough to erode a two-year old global surplus of unwanted crude oil.

Oil prices jumped as much as 3% on Monday, after Russia and Saudi Arabia both said a deal between Organization of the Petroleum Exporting Countries (Opec) and non-Opec members such as Russia in curbing crude output was possible.

December Brent crude oil futures were down 42c at $52.72 a barrel yesterday, below Monday’s one-year high at $53.73, but off an intraday low at $52.51.

Global oil supply could fall into line more quickly with demand if Opec and Russia agree to a steep enough cut, but it is unclear how rapidly this might happen, the International Energy Agency said yesterday.

“The word I look at is ‘if’,” Saxo Bank senior manager Ole Hansen said.

“Opec’s compliance with its own limits is not good. What it all adds up to is an increased belief that a firm bottom has been established, but as the market moves higher the risk of self-defeat rises as it opens the door right open for the return of production growth among high-cost producers.”

Rosneft head Igor Sechin said his company will not cut or freeze oil production as part of a possible agreement with Opec.

“Underlying scepticism that global oil producers will succeed in taking co-ordinated action to support prices is, therefore, alive and well,” said PVM Oil Associates analyst Stephen Brennock said.

Meanwhile, BP chief Robert Dudley said he expects global oil prices to stabilise at around $55-$70 per barrel for the rest of the decade.