OPEC need to revise their policy under the new sharp drop of oil.
ABC NEWS 26/9/2006
Oil Falls Below $60 a Barrel in Asia
By TANALEE SMITH
SINGAPORE Sep 25, 2006 (AP)— Oil prices briefly fell below $60 for the first time in six months Monday amid signs of growing petroleum inventories and easing worries about potential supply disruptions.
"Hedge funds and investors have been bailing out because geopolitical tensions have eased and they also realize that inventories are high during this period of seasonally weak demand at the end of summer," Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
Light, sweet crude for November delivery fell as low as $59.94 a barrel in Asian electronic trading on the New York Mercantile Exchange the lowest in intraday trading since March 13 before rising in midafternoon trading to $60.03, down 52 cents from Friday's close.
November Brent crude on London's ICE Futures exchange fell 45 cents to $59.96 a barrel.
Oil prices have dropped more than 23 percent since hitting a record $78.40 in mid-July due to a combination of factors: ample global inventories, receding worries about the Atlantic hurricane season, easing concerns about supply threats from Iran and Nigeria and signs of economic weakness in the U.S., which would restrain energy demand.
"But as long as there is limited excess production capacity and limited refinery conversion capacity, the market will still be prone to periodic price spikes," Shum predicted.
Oil prices have fallen since the beginning of the month on the lack of developments in the standoff between the United Nations and Iran, who defied the U.N.'s Aug. 31 deadline to stop enriching uranium that could be used to produce nuclear weapons.
The high prices in July and August were largely fueled by concern over the possibility that Iran could disrupt oil supply if sanctions were imposed or if the monthlong conflict between Lebanon and Israel escalated.
Nigeria, Africa's largest crude oil producer, was also beset by troubles, including kidnappings of oil workers and a strike by workers' unions.
Fears of hurricane damage to U.S. Gulf Coast refineries also drove the market higher this summer but the storms so far have blown past the coast.