Oil Below $60 Ahead of OPEC, Firmer Dollar Drags
| 26 May 2009 | 05:37 AM ET

Oil fell below $60 a barrel on Tuesday, pressured partly by a firmer U.S. 
dollar and expectations an OPEC meeting later this week would keep the producer 
group's output unchanged.

U.S. oil prices for July delivery fell from Friday's close.

London Brent crude was down.

There was no settlement price for U.S. crude oil on Monday as NYMEX was closed 
for the Memorial Day holiday in the United States.

Oil has nearly doubled in price since December, buoyed partly by expectations 
of higher prices if the world economy recovers.

U.S. crude has reached its highest in six months.

"Clearly, more fund money is now banking on higher oil prices down the road," 
Edward Meir of broker MF Global said in a research note.

But he said the supply/demand outlook for oil was less promising in the near 

"Particularly in the light of the likely OPEC decision to leave quotas 
unchanged. This leaves unaddressed the continuing build up in oil inventories, 
which could come back to haunt the cartel."

A firmer U.S. dollar weighed on the market. A stronger dollar puts downward 
pressure on oil prices as it makes oil more expensive for holders of other 


OPEC's most influential member Saudi Arabia said the group was likely to leave 
its output targets unchanged.

The al-Hayat newspaper quoted Saudi Oil Minister Ali al-Naimi as saying world 
stocks were still too high to consider lifting output.

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The Organization of the Petroleum Exporting Countries, which has already 
pledged to curb output by 4.2 million barrels per day since September, will 
meet in Vienna on Thursday to review its supply policy.

Saudi Arabia also warned oil prices could spike up to the $150 record peak 
reached in 2008 within three years as it joined other energy leaders in calling 
for more investment to boost oil output over the long term.

Militant action in Nigeria has become a supportive factor for prices.

Nigerian militants launched a major strike against the oil industry late on 
Sunday, bombing a Chevron pipeline and shutting 100,000 bpd of output.

Fresh provocations by North Korea, which fired more missiles on Tuesday after a 
nuclear test a day earlier, added to market tensions and caused Asian and 
European shares to fall.
Copyright 2009 Reuters. Click for restrictions.

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