By Agency Reporter

Wednesday, 19 Jan 2011

Brent crude futures edged higher on Tuesday after Organisation of the Petroleum Exporting Countries members signalled the group would maintain production levels even as prices flirt with $100 a barrel, while the resumption of shipments through the Trans-Alaska Pipeline capped price gains.

According to a Bloomberg News report on Tuesday, that ICE Brent for March added 32 cents to $97.75 a barrel at 0736 GMT. The front-month Brent contract on Friday touched $99.20, the highest price since October 2008.

With the installation of a bypass completed, operators of the Alaskan line expect to ramp up flows to 500,000 barrels per day by Tuesday, more than a week after a leak forced the duct’s closure. Shipments are set to reach to 640,000 bpd, or about 12 per cent of United States output, within days.

“There is no fresh catalyst to boost oil prices further,” said Mr. Serene Lim, a Singapore-based oil analyst at ANZ. “It seems that $100 is a very huge psychological barrier,” he added.

Producers including BP, ConocoPhillips, and Exxon Mobil, got permission to resume normal output from Alaska’s North Slope on Monday afternoon after the pipeline reopened, and will gradually boost volumes over the coming days, a spokeswoman from operator Alyeska said.

The head of the International Energy Agency, an adviser to 28 industrialised countries, on Monday described the current oil price as “alarming” and warned it could be damaging to the world economy.

Still, the United Arab Emirates’ oil minister said he was not concerned by rising prices, echoing comments by OPEC producers Iran and Venezuela this week. Algeria’s oil minister also said the oil market was balanced.

“In their minds, they say that the world oil market remains well supplied, so they might keep production targets intact for the time being until prices spike,” Lim from ANZ said.

US crude benchmark prices fell 31 cents to $91.23, but most of that drop came during Monday. The New York Mercantile Exchange is combining Monday’s and Tuesday’s trades into one session because of the Martin Luther King holiday and will produce just one settlement after Tuesday’s close.

 

Source: Punch