Oil prices fall as OPEC meets

8th June 2011, Comments 0 comments

Oil prices dropped on Wednesday as OPEC considered whether to boost supplies aimed at reviving weak global economic growth.

New York's main contract, light sweet crude for delivery in July, fell 89 cents to $98.20 a barrel.

Brent North Sea crude for July lost 71 cents to $116.07 a barrel in early London deals.

"The market was nervous ahead of today's all important OPEC policy meeting in Vienna," said Andrey Kryuchenkov, a commodities analyst at VTB Capital financial group.

"The market's reaction would depend on the scale of a potential hike and following comments. Prices could pullback significantly if there was an unexpected quick consensus with OPEC showing it can act quickly and decisively by reaching new output targets to elevate supply fears," he added.

The Organization of Petroleum Exporting Countries (OPEC) squared up on Wednesday for a critical decision on whether to raise oil output for the first time for almost four years to underpin the global economy.

One central factor is a choke on production in Libya owing to unrest.

OPEC, which accounts for an estimated 40 percent of global oil supplies, will announce its decision after a regular meeting of its 12 member nations in Vienna, where the cartel is based.

Consumer nations are appealing for OPEC to pump more crude amid concerns that high oil prices -- with London Brent oil currently trading above $116 per barrel -- could further damage the faltering global economic recovery.

Brent crude has soared by about 21 percent in value since the start of this year as spreading unrest in the oil-rich Middle East and North Africa region cut supplies.

Unrest in OPEC member Libya, which erupted in February, has removed about 1.3 million barrels per day from the global oil market.

© 2011 AFP

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