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SINGAPORE: Oil prices eased slightly in Asia on
Wednesday but remained above $87 a barrel in a market
focused on a potential Turkish incursion into northern Iraq.
While expressing concern at the
price rise, the chief of the OPEC oil cartel said the world oil
market remains well supplied.
New York’s main oil futures
contract, light sweet crude for delivery in November, was $0.23
lower in afternoon trade at $87.38 a barrel.
In US trade on Tuesday, oil
struck a record intra-day high of $88.20 before dropping back to
settle above $87 for the first time, at $87.61 a barrel.
On Monday it jumped more than $2.
Brent crude oil for December
delivery was $0.23 lower at $83.32 a barrel.
In London trade on Tuesday, Brent
for November delivery advanced $1.41 to settle at $84.16, after
earlier hitting an all-time high of $84.49 during the session.
Oil prices surged as investors
fixated on Turkey, where the parliament is expected to adopt a
government motion on Wednesday to allow cross-border operations
against bases of the Kurdistan Workers Party in Iraq.
The White House has urged Turkey
to refrain from any unilateral action that could further destabilize
Iraq, while Iraq’s deputy prime minister warned of “grave
consequences” for the stability of his country and the region.
Steve Rowles, an analyst with CFC
Seymour in Hong Kong, said the market has not been as worried over a
geopolitical issue since last July when Israel and Hezbollah
guerrillas battled in Lebanon.
That conflict led oil to spike to
a then-record above $78 a barrel.
Rowles said that while it is
difficult to predict how the current tensions will play out, “I
just think that overall the tensions will eventually subside.”
Rowles said Iraq “isn’t the
oil producer that it once was.”
Abdalla Salem El-Badri, chief of
the Organization of the Petroleum Exporting Countries (OPEC), said
Tuesday that the cartel was “concerned” at the price spike but
argued current levels did not reflect the true state of supply and
demand.
The market is “very well
supplied,” he said.
Rowles said he agreed. He said a
weekly US Department of Energy report on inventories, to be issued
later Wednesday, was expected to show a build up in crude stocks.
In the broader context he noted
that the Atlantic Ocean hurricane season, which poses a potential
threat to oil installations, is drawing to a close, and forecasts
are for a relatively mild North American winter.
“Where is the problem?” he
asked.
But Sucden analyst Michael
Davies, commenting during US trading hours, said the surge in prices
came amid “geopolitical and supply worries.”
Many of Iraq’s largest oil
fields are located in the north of the troubled country.
--AFP
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