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Oil settles in European trading

Stephen Beard Jan 2, 2007


SCOTT JAGOW: Wanna take a guess at how much higher oil prices were a year ago?One penny. Oil was trading at $61.04 a barrel going into 2006. And that’s about where it is this morning. There was some concern the execution of Saddam Hussein would spark violence in Iraq. But as Stephen Beard reports, the oil markets are pretty calm.

STEPHEN BEARD: Oil prices have dropped below $61 a barrel in London. One key factor according to traders is the relatively muted reaction in Iraq to the hanging of Saddam Hussein.

Had there been widespread violence, traders say, oil prices would have jumped. But Iraq is not the only or even the most important force at work.

Rob Lachlan of Man Financial says the mild winter in North America and Europe is also playing a major part.

ROB LACHLAN: This mild weather that we’ve been experiencing now for some two months has meant that at the moment demand is slack. That is affecting things at the moment. Certainly I would suggest it is the most dominant factor in the market over the last seven days.

However, dealers say that OPEC will be doing its utmost to restrain supply and push prices up. The cartel agreed last month to cut output by an extra half a million barrels a day.

In London, this is Stephen Beard for Marketplace.

THOMAS: Meantime, OPEC has increased its membership for the first time in 30 years by admitting Angola. It took effect with the beginning of 2007.

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