Oil Falls Below $89


Oil tumbled more than $2 to a one-month low below $89 a barrel on Friday as attention returned to next week's OPEC meeting that is expected to boost output.

Analysts said that a dip in the price below $90, a key point on the price charts that many traders use as a guide, had triggered a wave of further selling.

U.S. crude fell $2.07 to $88.94 a barrel by 8:26 a.m. EST, off lows of $88.52, a level not seen since October 25. It had settled up 39 cents at $91.01 a barrel on Thursday, having zipped as high as $95.17 earlier, after an explosion in the United States temporarily halted crude supplies along an important Canada-U.S. pipeline. Brent crude was $1.76 down at $88.43 a barrel, off lows of $87.55.

Oil zoomed up more than $4 on Thursday after the explosion along the Enbridge Pipeline from Canada, which supplies more than 10 percent of U.S. crude imports, killed two workers and choked off crude flows.

But the operator said on Thursday that three of the four pipelines shut had already been restarted, and that the remaining line could return to service within a few days, easing concerns of a severe supply disruption.

The U.S. Department of Energy said it was prepared to open up the emergency crude stockpile to compensate for the disruption, but had yet to receive any requests.

Traders said the market had by and large shrugged off the Enbridge impact, and the market's focus had returned to the Organization of the Petroleum Exporting Countries (OPEC) meeting in Abu Dhabi on December 5.

Some OPEC members favor an output increase, but others say the oil market is well supplied.

The oil market is betting the exporter group could decide to boost output by 500,000 barrels per day (bpd). A similar OPEC meeting in September agreed to raise production by 500,000 bpd.

Oil had risen more than 40 percent since August and has come close to breaking the $100 mark, driven by the weak dollar, concerns over shrinking supplies ahead of winter and speculative plays.

But prices have fallen back lately amid rising worries about the strength of the U.S. economy, a rally in the dollar and expectations of a supply increase from OPEC.

 

 


Reuters
11/30/2007 7:05:09 AM