Oil prices fall as OPEC considers production increase

Crude-oil prices slipped below $65 a barrel yesterday as traders took profits amid signs that petroleum supplies were recovering and the recent price surge had deflated demand.

“There will be some volatility to the market, but barring any other major disruptions, I think we’ll continue to head lower in prices,” said Agbeli Ameko, managing partner at Enercast.com.

On London’s International Petroleum Exchange, October Brent crude fell 21 cents to settle at $63.16 a barrel. Analysts had expected the October contract to dip ahead of its expiration later yesterday.

In a monthly report published yesterday, the Organisation of Petroleum Exporting Countries cut its 2005 world oil-demand forecast by 150,000 barrels a day, saying record high petrol prices have pushed down forecasts for world oil demand.

World oil demand is forecast to grow 1.4 million barrels a day in 2005 and 1.5 million barrels a day in 2006, a downward revision of 210,000 barrels for 2006, the report said.

These forecasts are likely to be revised again in the coming months as US production recovers from Hurricane Katrina, the report added.

OPEC Acting Secretary General Adnan Shihab-Eldin told Dow Jones Newswires yesterday that the cartel would consider increasing its production ceiling by almost 2% at its meeting on Monday.

“OPEC has committed itself to ensure there’s adequate supply,” Shihab-Eldin said, “so the president has put forward a proposal to add 500,000 barrels a day to the ceiling if the market calls for it.”

Shihab-Eldin said the cartel does not intend to alter its two-year-old policy of allowing global inventories to build. The current ceiling for 10 of its 11 members, excluding Iraq, is 28 million barrels a day.