Oil prices have begun to climb again due to fears that producer cartel, Opec, is set to cut back production to halt the recent price fall. US light sweet crude was trading at 42.70 US dollars a barrel at the start of the week, after hitting lows of 42.05 US dollars.
Opec’s 11 members are due to meet today (Friday, December 10) in Cairo, to set the policy for 2005. Warmer weather in North America and healthier US fuel stocks, triggered a 14 per cent drop in oil prices last week, which has concerned some Opec members.
Estimates suggest that Opec countries, between them the source of about one third of the world’s oil, are pumping as much as two million barrels a day more than the cartel’s quota of 27 million barrels.
Opec, officially, likes the average price of a ‘basket’ of its oil products to stay between 22 and 28 US dollars a barrel, and the recent gains in oil prices, have left that far behind. Opec president, Purnomo Yusgiantoro suggested that a more realistic band would be 28 to 32 US dollars, while some members have advocated an even higher rate.