New York, May 22: World oil prices skidded yesterday, taking the New York contract below 40 dollars a barrel, after Saudi Arabia proposed that OPEC raise output by more than 2.0 million barrels a day. New York's benchmark contract, light sweet crude for delivery in July, fell 1.05 dollars to 39.75 dollars in early afternoon trade. Brent North Sea crude oil for July delivery fell 71 cents to 36.51 dollars per barrel in late London trading. It is a very severe sell-off," said REFCO market analyst Jim Still. "I think it is very much predicated on the news that Saudi Arabia will propose a two million barrel per day increase at the Amsterdam meeting this weekend."
Saudi Arabian oil minister Ali Al-Naimi said in Amsterdam that he would propose the increase at an informal meeting Saturday of the organization of petroleum exporting countries (OPEC).
Riyadh was making the call "out of concern for market stability, supply continuity and the growth of the world economy -- especially for developing countries, which stand to be more adversely affected by the sudden and excessive oil price increase," he said.
The statement chilled the market.
Bureau Report