Oil Prices Fall but Hold Above $61

The Associated Press
Tuesday, December 12, 2006; 6:22 PM

LONDON -- Oil prices fell but held above $61 a barrel Tuesday as the market awaited OPEC's decision this week on whether to make further production cuts to shore up prices.

Ministers of the Organization of Petroleum Exporting Countries began gathering in Abuja, Nigeria, and continued to send mixed messages about their intent.

Light sweet crude for January delivery declined by 20 cents to settle at $61.02 a barrel on the New York Mercantile Exchange. January Brent crude on London's ICE Futures exchange slid 32 cents to settle at $61.52 a barrel.

In Nigeria, Qatar's Oil Minister Abdullah bin Hamad Al Attiyah was quoted by Dow Jones Newswires as saying that OPEC is "very worried" about the effects the weaker dollar is having on its purchasing power in Europe and beyond.

Meanwhile, United Arab Emirates' Oil Minister Mohammed al-Hamli told Dow Jones there would be no crude production cut by OPEC unless "absolutely necessary", adding that current oil prices around $60 a barrel are reasonable, a view echoed by Kuwait's Oil Minister Sheikh Ali Al Jarrah Al Sabah.

Still, some OPEC officials have been pressing in recent days for a cut in output on top of the production cut of 1.2 million barrels a day approved in October. Saudi Oil Minister Ali Naimi said recently that he was concerned about excessively high oil inventories in major consuming nations.

Recent data from the International Energy Agency showed stocks among the 30 members of the Organization for Economic Cooperation and Development at the end of September held at 2.76 billion barrels, the highest level in almost eight years and 4.5 percent higher than a year ago.

In Tokyo, U.S. Energy Secretary Samuel Bodman said he hopes OPEC ministers will not decide to cut crude oil output levels further. He said the United States has encouraged oil producers "to make sure the market is very well supplied."

Expectations of milder temperatures in the United States also weighed on prices. Temperatures in the Northeast, the nation's largest heating oil market, were expected to moderate this week, with above-normal temperatures through most of the nation, according to the National Weather Service.

Nymex heating oil futures declined by less than a penny to settle at $1.7224 a gallon, gasoline futures slid by less than a penny to $1.595 a gallon and natural gas futures slid by less than a penny to $7.43 per 1,000 cubic feet.

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