NEW YORK (Reuters) - Oil fell on Friday, extending a drop that has lopped $7 off prices this week as supply worries eased with the restart of a major U.S. import pipeline and a possible rise in OPEC production.
The Organization of the Petroleum Exporting Countries will meet in Abu Dhabi December 5, and Nigeria on Friday said the cartel may agree at the meeting to boost supplies.
Qatar and cartel heavyweight Saudi Arabia, however, said the market was already well supplied, while Kuwait said a previous OPEC agreement to raise output from November 1 had dampened oil’s climb to a peak near $100 a barrel last week.
U.S. crude slipped 41 cents to to $90.60 a barrel by 1845 GMT, after dipping as low as $88.52 earlier, well off the record $99.29 hit last week. Brent crude fell 17 cents to $90.05 a barrel.
The resumption of 80 percent of throughput in Enbridge’s pipeline system, which carries 1.1 million barrels per day (bpd) of crude from Canada into the Midwest of the world’s top consumer, also helped push prices lower.
The system was shut on Wednesday by an explosion along a Minnesota-section of the pipelines, briefly choking off 10 percent of U.S. crude imports. Line 3, the only branch still shut, is expected to return to service over the next few days.
Prices spiked more than $4 after the blast, before giving up the gains after the U.S. Department of Energy said it was ready to provide emergency oil stockpiles to refiners if needed and Enbridge said flows would restart quickly.
A customer pumps gas at a gas station in Louisville, February 2, 2007. REUTERS/John Sommers II
“We went from almost losing Canada to having the thing fixed in a day,” said John Kilduff of MF Global.
Concerns about the health of the U.S. economy and signs of faltering demand growth in the giant oil market have also pressured prices.
Federal Reserve Chairman Ben Bernanke bolstered hopes of another interest rate cut on Thursday, saying a resurgence in financial strains in recent weeks had dimmed the outlook for the U.S. economy.
“Everyone’s trying to gauge how much of a train wreck the economy is,” said Kilduff. “It doesn’t bode well for sustained energy demand growth going into next year. To sustain near $100 oil, we need at least decent economic growth.”
OPEC members have insisted there is enough crude on markets to keep up with demand and blamed high prices on speculators.
“There is absolutely ample supply,” said Saudi Oil Minister Ali al-Naimi, OPEC’s most influential voice.
Asked whether that meant OPEC would need to raise production, he responded: “That remains to be seen.”
“The price movement has nothing to do with the fundamentals of the market.”
Kuwait’s acting oil minister said OPEC may agree to increase oil output if required by market fundamentals, while Nigeria said an the producer group decide to ramp up production next week.
“We are now looking at OPEC, and we’re going to be running into the weekend looking at OPEC. It’s going to be the key. Will they, won’t they? And how much are they going to add on or not,” said Rob Laughlin at MF Global.
A Reuters poll of market participants showed many players expecting OPEC to add supplies again, after members previously agreed to add 500,000 bpd to markets starting November 1.
Reporting by Matthew Robinson and Richard Valdmanis in New York; Santosh Menon in London; Jiwon Chung in Singapore, Randolph Fabi in London and Alex Lawler in Doha; Editing by Marguerita Choy
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