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Oil below US$74 as OPEC ministers flag steady output

OIL prices settled below US$74 a barrel yesterday on high oil and gas stockpiles in the U.S. and a rebounding dollar. Several OPEC ministers also said they don't expect their group to change production levels at a meeting later this month.

Benchmark crude for January delivery fell 2 percent, or US$1.54, to settle at US$73.93 on the New York Mercantile Exchange, the lowest level in about two months

Top oil officials from Libya, Kuwait, Algeria and Qatar said Saturday that the Organization of Petroleum Exporting Countries, which supplies about 35 percent of the world's crude, will likely leave output levels unchanged at the group's next policy meeting on Dec. 22.

Saudi Arabia's oil minister, Ali Naimi, said Saturday that oil prices, which have bounced around the high US$70s for about two months, were "perfect."

"Crude oil prices have been in a downtrend since Oct. 21," said a report from Sucden Research in London. "Given the high levels of crude inventories as well as views that OPEC will keep the output quotas unchanged ... it looks likely that fundamentals do not support higher crude oil prices."

The dollar traded higher than it has for a month against the euro yesterday and crude prices fell sharply, demonstrating how much heft the dollar has in energy markets.

Oil is bought and sold largely in dollars and this year the dollar has taken a beating compared with currencies like the euro. That has allowed investors holding euros and other stronger currencies to buy a lot more oil for less.

Many experts say that the uncertainties of the economic recovery and the high inventories of crude and fuels in the United States do not justify oil prices near US$80.

In other Nymex trading in January contracts, heating oil fell 1.71 cents to settle at US$2.0097 and gasoline slipped 3.44 cents to settle at US$1.9406. Natural gas jumped 38.5 cents to settle at US$4.971 per 1,000 cubic feet.

In London, Brent crude for January delivery lost US$1.09 to settle at US$77.53 on the ICE Futures exchange.


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