Oil Prices Hit $90 On OPEC Inaction

Cartel Leaves Output Unchanged; Says Enough Oil Available, No Reason For $100 Prices

(CBS/AP)  Oil prices rose sharply to about $90 a barrel Wednesday as OPEC members said they would keep output ceilings steady.

Expectations that a weekly U.S. petroleum supply report due later Wednesday would show a small decrease in crude inventories also supported prices.

Instead, the U.S. government data published Wednesday showed that U.S. oil supplies fell steeply last week while gasoline stockpiles rose, both by greater margins than analysts had expected.

Light, sweet crude for January delivery added $1.61 to $89.93 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe.

In London, January Brent crude futures rose $1.28 to $90.81 a barrel on the ICE Futures exchange.

OPEC's oil ministers issued a statement after a meeting in Abu Dhabi, United Arab Emirates, confirming that the group would leave output unchanged "for the time being," because the world was "well supplied" and crude reserves were at comfortable levels.

"We have enough stocks in the market," OPEC Secretary-General Abdalla Salem el-Badri said after the decision was reached. "There is no reason for prices to go (to) $100 a barrel."

Still, the statement expressed concern about market volatility driven by speculation - and suggested it was ready to step in if needed by taking "every measure deemed necessary to keep market stability through the maintenance of supply and demand in balance."

Oil producers are concerned about the U.S. economy, says energy analyst Julian Lee of the Center for Global Energy Studies.

"There's a sense that consumer (confidence) is being undermined and I think that's bleeding through to greater and greater fears about a recession in the United States," Lee said.

The 13-nation group plans to meet again Feb. 1 for a review of winter demand and the world economy, which seemed to indicate that OPEC was prepared to increase quotas should prices go much higher.

OPEC's decision suggested that it now viewed prices near or above $90 - an increase of about $40 since the start of the year - as acceptable.

A number of reports have suggested that several OPEC countries are already exceeding their output quotas.

With the OPEC decision "putting a floor on the price decline," analysts said other issues would determine the chances of a new rally in the coming days.

"The focus will now shift back to the weekly statistics and the Fed meeting next week and its repercussion for the dollar index," said Olivier Jakob at Petromatrix in Switzerland.

Others seemed dismayed by OPEC's decision, saying the oil ministers considered prices above $90 a barrel "as their birthright."

"How the market finishes today could tell us what prices really want to do," Peter Beutel, president of U.S. energy risk management firm Cameron Hanover, said in a research note. "If prices somehow find a way to finish in negative territory today, despite OPEC's greed, it would be really bearish."

For the week ending Nov. 30, crude oil inventories fell by 8 million barrels, or 2.6 percent, to 305.2 million barrels, the Energy Department's Energy Information Administration said in its weekly report. It was the third straight weekly draw.

Analysts expected oil stockpiles, which are 8.8 percent below year-ago levels, to fall by 700,000 barrels, according to a survey by Dow Jones Newswires.

Gasoline inventories rose by 4 million barrels, or 2 percent, to 200.6 million barrels, which is 1.7 percent below year-ago levels. Analysts expected stockpiles of the motor fuel to rise by 700,000 barrels.

Demand for gasoline over the four weeks ending Nov. 30 was 0.2 percent higher than a year earlier, averaging about 9.3 million barrels a day.

[jetranger7]

""SHOCKING-VIDEO"" WWW.WARONGREED.ORG

[shanev137]

harp1963...I hear ya.

With all the dumbing down this country has done in last 20 years, our country is well on it''s way to shutting down.

[lizardbate]

We have the capped off oil wells AND--- 1.2 Trillion Barrels of " BLACK GOLD" sitting in the ground in the West that is now untapped. Shale Oil!!!! Do your research, and ask your congressman and senator why we are depending on the middleast for oil. We would not need "camel jockeys" if our government would protect it''s people by tapping our own bountiful resources.

[harp1963]

Who cares. Just make it $400 a barrel. If Americans can''t unite and shut down the country the way Jimmy Hoffa did with the Teamsters, then let the foreign oil barons along with George and D i c k do it with oil. America needs to shut down anyway, we are obsessed with profit, money, working all the time, neglecting our families, and coveting what our neighbor has. Being poor won''t kill us. In hindsight we''ll all probably be thankful for some poverty. Let 1% of the population have it all. Who cares. Let them choke on all their money. In the end, their going to find out they would have been better off spending their lives living under a bridge in Pittsburgh. The joke is really on them, but they are to full of pride and the love of themselves to believe the son of their creator could be some lowely carpenter and not some vain power guy.

[jetranger7]

Mathiodaux is right on the comment below, about SPECULATORS up on the NY-Stock exchange and NY-Wall Street driving up the price by Estimating the futures of what might be,, this needs to end, stop put to it !But hang on I''m gonna drive the price of OIL back down to 20.00 a Barrell here shortly,, I have a Plan, so hang on to your seats, I''m gonna take the OIL Companies for a Major ride down Poverty Lane, Soon !!

[lvdragonlady-2009]

What we need to do is tell OPEC and Chavez to kiss it and reopen all of those oil wells we capped in the 70''s. We are only dependent on other countries for oil, because our ''government'' decided it wanted to play nice. To heck with nice, give us back our reasonable gas prices. I remember when they made such a big deal about how the Alaskan pipeline would make it so we would not have to depend on foreign oil. What happened? Ask your congressperson!!

[shanev137]

you are exactly right mathibodaux.

it''s a crime what the speculators are doing to this country.

but it seems that sheeple Americans really love paying over $3 a gallon for gas.

[mathibodaux]

OPEC is not setting the price of oil. The price of oil is set at market prices in places such as New York City in the marketplace. In other words, American speculators are bidding up the price of oil on delivery contracts. These persons are involved in this solely to make profit on the difference in prices today and some point in the future. They have no intention of actually taking delivery of oil to store in refinery tanks somewhere.

The same thing goes on in various mercantile exchanges across the globe. Arabs, oil producers, and most oil companies are not involved in this. Large fuel users (and refiners) are involved in these markets to save money in the future by buying a commitment to take delivery of fuel in the future. Those actually taking delivery of oil/fuel are the proper persons to be involved in these markets. Merrill Lynch, etc. should not be involved. Oil companies and oil-producing countries do reap the benefits of the speculators actions, however, because the actions of the speculators drive the market to higher and higher prices. The speculators have little incentive to see commodity prices go down. The extremely short-term mentality of the markets is responsible for the high prices, not "Arabs".