- The Washington Times - Friday, March 13, 2009

NEW YORK (AP) - Oil prices wavered Friday as OPEC heads to Europe to discuss supply levels amid more predictions that demand for crude is falling.

Benchmark crude for April delivery fell 42 cents to $46.61 a barrel on the New York Mercantile Exchange. In London, Brent prices gained 35 cents to $45.44 on the ICE Futures exchange.

Crude prices lurched between $42 and $47 a barrel this week as leaders of the Organization of Petroleum Exporting Countries sent mixed signals about what they’d do with their vast oil reserves. OPEC, which produces more than 40 percent of the world’s oil, already said it would slash 4.2 million barrels per day in a coordinated effort to boost prices.

Venezuela said OPEC should tighten the spigot further, but Nigeria and Qatar have frowned on more production cuts. Many analysts are expecting a cut of between 500,000 and 1 million barrels a day.

Complicating matters, Russia said this week it will send Vice Premier Igor Sechin to the OPEC meeting in Vienna, Austria. Russia has toyed with the idea of working more closely with OPEC to control the flow of oil to the world.

“It’s a big deal” if Russia joins OPEC, analyst and trader Stephen Schork said. Russia sits on 60 billion barrels of proven oil reserves and if it were a member, it would be OPEC’s second-largest producer next to Saudi Arabia, according to the Energy Information Administration.

“The post-9/11 world always took comfort in the division between Russia and OPEC,” Schork said. “Russia didn’t to take OPEC’s marching orders, and that was good for price. But the world has changed.”

The huge swing in energy prices, which rocketed above $147 last year before plunging to less than $34 a barrel in recent months, has left oil producers searching for ways to take greater control of the market.

Even if it calls for a cut in production, experts are uncertain how much of an impact it would have on supplies. Six months after announcing its first round of production cuts, OPEC still hasn’t finished the job.

JBC Energy in Vienna estimated OPEC members’ compliance with earlier cuts at an average of 80 percent in the first quarter of the year and at over 90 percent so far in March.

And world demand is so low that diminished supplies probably won’t give OPEC the price boosts it desires, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service,

“This isn’t the year for it,” he said. “The world is broke and it’s not using energy.”

The Energy Department said earlier in the week that global demand would fall more than expected this year. And on Friday, two other agencies supported that projection.

The International Energy Agency released its predictions Friday, saying global oil demand in 2009 would drop for a second consecutive year for the first time since 1982-1983. The IEA cut its forecast for demand this year by 270,000 barrels a day to 84.4 million barrels a day _ 1.5 percent lower than a year earlier.

OPEC also lowered its 2009 global demand estimate by 400,000 barrels a day to 84.6 million barrels, 1 million barrels a day less than in 2008. OPEC expects demand for its own crude to fall by 1.8 million barrels a day on the year, to an average of 29.1 million barrels a day in 2009.

At the pump, retail gas prices dropped every day this week, falling another penny Friday to a national average of $1.922 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Gas prices are nearly 2 cents per gallon below what they were last month, and they’re $1.345 cheaper than a year ago.

In other Nymex trading, gasoline for April delivery rose less than a penny to $1.35 a gallon and heating fell about the same amount to $1.2215 a gallon. Natural gas for April delivery fell 1 cent to $3.984 per 1,000 cubic feet.


Associated Press writers George Jahn in Vienna, Austria, Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.

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