The Organization of Petroleum Exporting Countries (OPEC) meets in Vienna on Wednesday, with most analysts expecting the producer group, the source of more than a third of the world’s oil supply, to maintain its official output target stable around $70.
Oil prices pushed toward $69 a barrel in thin trade on Monday, with sentiment buoyed by Asian and European equities and by a decision by the G20 to keep economic stimulus measures in place. Group of 20 finance leaders, who met in London on Saturday, said they would not end economic stimulus plans until the recovery was well entrenched. Traders predicted the G20’s extended financial support would translate into higher fuel demand.
Oil prices, which fell 6.5% last week, have been trading in a range between $65 and $75 a barrel since the start of August, with prices swinging on economic data as investors seek clues about the speed of a recovery from the recession.
Crude oil prices slid to $67.26 per barrel on the New York Mercantile Exchange Tuesday, as U.S. stock markets closed flat for the second consecutive day.
Prices for light, sweet crude fell 98 cents from Monday’s closing price. Heating oil prices fell marginally, down 0.0176 cents to $1.7705 per gallon. Reformulated blendstock gasoline dropped 0.017 cents to $1.913 per gallon. Natural gas prices lost 0.109 cents to $3.52 per million British thermal units.
At the pump, the average price for a gallon of regular unleaded gasoline was $2.505 Tuesday, up a half cent from Monday’s $2.50 a gallon, AAA said.
Oil prices rose even after report that US supplies of the fuel declined by one million barrels last week, increasing optimism that energy demand will recover soon. The government reported that the nation is consuming less than it has in years and that inventories are the highest in nearly two decades. Benchmark crude for June delivery gained $1.05 to settle at $50.97 a barrel on the New York Mercantile Exchange.
Russia is poised to hold a conference in Moscow and invited OPEC representatives to take part and discuss the procedure for setting oil prices, Deputy Prime Minister Igor Sechin said during a meeting with President Dmitry Medvedev. Sechin indicated that Moscow would suggest a gradual transition to the new system of price formation, the Vesti TV channel reported Sechin as saying. He also noted that the problem of making oil reserves was becoming especially severe.
In turn, Medvedev stressed that Russia was interested in stable, predictable and fair oil prices. “We do not want extremely high prices that hurt the economic structure, and of course we do not want a significant drop in prices below their fair level,” he stated. With this in mind, OPEC and other countries will have to take steps to prevent any deepening of the crisis or further deterioration of the economic situation, Medvedev observed.
President Hugo Chavez is vowing that Venezuela will provide China with all the oil it needs “for the next 200 years.” Chavez spoke Tuesday to a visiting delegation led by Chinese Vice President Xi Jinping. The two nations are expected to sign a series of accords on Wednesday.
Caracas sees China as a key partner in its strategy of diversifying oil sales away from the U.S., which buys about half Venezuela’s crude despite years of political tensions. The South American nation aims to increase exports to China to 1 million barrels a day by 2012, up from 330,000 currently.
Venezuela and China plan to build four oil tankers and three refineries in China capable of processing heavy Venezuelan crude.