Petroleum Africa
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Friday, March 10, 2006
The Organization of Petroleum Exporting Countries’ reference basket of seven crude oils closed on Tuesday with an average price of $32.30 per barrel, a decrease of .29 cents from Monday’s price of$32.59 per barrel, according to OPECNA the official news agency for OPEC.
OPEC has a mechanism intended to keep its basket price within this range by raising output by 500,000 bpd if the basket price holds above $28 for 20 consecutive trading days, or lowering output by 500,000 bpd if the basket price stays below $22 for 10 consecutive trading days.
But the group has chosen to ignore the mechanism for now, citing the depreciation of the U.S. dollar and what it thinks are unusual world oil market conditions, driven by speculators and not fundamentals. It fears a collapse in the price of crude ahead of a seasonal downturn in demand.
OPEC’s price has been above the target band since Dec. 5. Consuming nations’ energy officials have said the price-band mechanism is effectively defunct.
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