KUALA LUMPUR, Malaysia, (AP) – Oil prices dipped in Asia on Tuesday as traders weighed OPEC’s decision to maintain production levels amid persistent concerns over the global financial crisis.
Benchmark crude for April delivery eased 55 cents to $46.80 a barrel by midmorning in Singapore on the New York Mercantile Exchange. Prices fell as low as $43.62 a barrel Monday but rebounded to close up $1.10 at $47.35.
“At the moment, it’s a holding pattern. There are no major news that justify movement in the price. The international economic environment remains very weak,” said David Moore, commodity strategist at Commonwealth Bank of Australia.
Members of the Organization of Petroleum Exporting Countries said Sunday they will try to stick more closely to the group’s current output quotas but will not make further cuts to try and curb falling demand.
OPEC’s move dragged down oil prices early Monday but prices recovered overnight on confidence that the cartel’s move to boost compliance to existing output cuts will help restore balance to the oil market, Moore said.
Given the worsening global economic outlook, he said a “moderate downward bias” in oil prices was likely over the next few months.
Prices had risen from under $35 a barrel last month as investors anticipated OPEC would cut production by up to 1 million barrels a day on top of 4.2 million barrels of reductions announced since September.
While some of the oil producers at Sunday’s meeting said they supported another cut, Saudi Arabia argued for stricter compliance with existing output reductions. OPEC is overshooting its daily target level of just under 25 million barrels a day by about 800,000 barrels.
Some analysts said some OPEC producers are beginning to realize that to get long-term demand growth, they have to stimulate the economy with lower prices as opposed to trying to slow it down by raising prices.
Saudi Arabia’s oil minister however, said Monday that petroleum-producing countries need a price of at least $60 a barrel to bring more energy resources on the market.
“If we want all hydrocarbon resources developed worldwide, 40 dollars is not enough,” Ali al-Naimi told reporters in Geneva.
A new production cut remains an option during a May 28 OPEC special session to review prices and supply.
Some dealers said oil traders will likely turn their attention to global crude demand and the possibility of a second-half economic recovery.
In other Nymex trading, gasoline for April delivery fell 1 cent to $1.3572 a gallon, while heating oil dropped 1.9 cents to $1.1933 a gallon. Natural gas for April delivery was up 1.4 cents to $3.864 per 1,000 cubic feet.
In London, Brent crude was up $1.48 to $45.46 a barrel on the ICE Exchange in London.