CRUDE OIL prices fell almost 3 per cent in New York last night as speculation grew that Opec, the oil cartel, was on the brink of finalising an agreement to pump another 1.7 million barrels a day into the market to ease supply shortages.
A Kuwait delegate said at the group's meeting in Vienna late last night that the group was meeting to ratify an increase of more than 7.5 per cent to its global quotas. Talks had gone into a second day after a deep split emerged between nations, led by Saudi Arabia, that wanted a 1.7 million barrel increase and more hawkish countries, led by Iran, that wanted just 1.2 million.
The deal, if ratified, will be made against the background of heavy lobbying from the United States which, as the world's largest consumer of oil, had borne the brunt of a trebling of the oil price over the past month. The price spike was driven by Opec's decision a year ago to cut output by 4.3 million barrels to 22 million - an agreement that has been uncharacteristically adhered to by the 11 members of Opec.
Last night President Bill Clinton said there were "encouraging signs" that the US's diplomatic offensive to persuade major petroleum producers to pump more oil had paid off. "It could be sufficient to get production and consumption back into alignment and rebuild some of these stocks which are at their lowest point in a decade," he said. "And if that happens then I'll be encouraged."
Crude oil for May delivery on the New York Mercantile Exchange fell as much as 78 cents, or 2.8 per cent, to $27.01 a barrel, falling further away from recent nine-years above $34. The price of oil had already fallen some 20 per cent over the past three weeks on signs that the oil producers were concerned the high price was unsustainable and would seek to raise output. …