LONDON, 3 December 2003 — Oil prices rose yesterday in nervous trading ahead of this week’s OPEC meeting, with the market growing fearful that the cartel could signal tighter supply next year.
London Brent crude oil futures were up 55 cents at $28.80 a barrel, while New York light crude futures were up 65 cents at $30.61. Cold weather forecasts in the US were seen supporting a market that is getting nervous ahead of OPEC’s meeting in Vienna tomorrow.
The group is expected to leave its production ceiling unchanged at 24.5 million barrels per day, but traders said the market was more anxious about what ministers would say about the supply picture for early next year.
Analysts said traders caught short by the group’s surprise September decision to cut output from November were unlikely to bet on downside potential ahead of the meeting. “Anyone who has a memory of more than a month could expect to be nervous if they had short positions,” said Kevin Norrish, oil markets analyst at Barclays Capital. Ministers from Iran, Kuwait, the United Arab Emirates and Indonesia have all said they expect OPEC to keep output unchanged this week.
And the price of OPEC’s reference basket of crudes just dipped back under the upper limit of the group’s preferred $22-$28 price range on Monday. The basket price has spent a substantial part of the last two months above or near the top of the band.
Analysts polled by Reuters expected US crude oil supplies to have dropped last week as refineries raised output and imports steadied after a sharp fall the week before.
Seven analysts forecast that on average, US commercial stocks would have fallen by 1.4 million barrels in the week to Nov. 28.
But as refinery activity increased, distillate stocks, including heating oil, were forecast to show a small build of 1.0 million barrels and gasoline stocks were also seen increasing by a modest 840,000 barrels, on average.
Stock levels have been key to traders’ market sentiment as the United States heads into the winter with crude stocks below a 300-million barrel comfort zone, at 289.1 million barrels, according to data from the US government’s Energy Information Administration.
