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Oil prices steadied on Tuesday, as OPEC was set to debate a token rise in production, after climbing to near a record high above $78 due to pipeline attacks in the world's fifth-largest crude producer Mexico.
Several OPEC members have said they see no need to raise output at the group's meeting in Vienna on Monday as current stock levels are comfortable, though an OPEC source said on Monday Saudi Arabia and other Gulf Arab states back a token rise.
Any OPEC move to raise oil output at its meeting due to start 9 am London time on Tuesday would use the organization's current production as a starting point, not its nominal ceiling, a delegate in Vienna said on Tuesday.
"We continue to see some sort of complicated outcome such as the announcement of delayed production increases as the most likely one, as ministers are faced with a fast tightening market on one hand and growing economic risks on the other," said Barclays Capital.
The 10 OPEC members subject to output restrictions are already pumping around 1 million barrels per day (bpd) above their 25.8 million-bpd target, Reuters data show.
A number of consuming nations, including top consumer the United States, have called on OPEC to increase oil supplies as they see stocks declining rapidly in the coming peak winter season.
"U.S. crude stocks won't stop decreasing in the next weeks whatever OPEC's decision," said SG Commodities.
A plan to increase output may struggle to win support from members including Iran and Venezuela that take a more hawkish price view. Libya was quick to voice its opposition, saying on Tuesday that the group should not be swayed by short-term price movements.
Prices rallied to $78.47 in electronic trade on Monday after a series of attacks that caused explosions on Mexico's oil and gas pipelines. Chief executive Jesus Reyes Heroles of state firm Pemex said this will not hit the country's oil output or exports but cut off a quarter of its natural gas flow.
Several OPEC members have said they see no need to raise output at the group's meeting in Vienna on Monday as current stock levels are comfortable, though an OPEC source said on Monday Saudi Arabia and other Gulf Arab states back a token rise.
Any OPEC move to raise oil output at its meeting due to start 9 am London time on Tuesday would use the organization's current production as a starting point, not its nominal ceiling, a delegate in Vienna said on Tuesday.
"We continue to see some sort of complicated outcome such as the announcement of delayed production increases as the most likely one, as ministers are faced with a fast tightening market on one hand and growing economic risks on the other," said Barclays Capital.
The 10 OPEC members subject to output restrictions are already pumping around 1 million barrels per day (bpd) above their 25.8 million-bpd target, Reuters data show.
A number of consuming nations, including top consumer the United States, have called on OPEC to increase oil supplies as they see stocks declining rapidly in the coming peak winter season.
"U.S. crude stocks won't stop decreasing in the next weeks whatever OPEC's decision," said SG Commodities.
A plan to increase output may struggle to win support from members including Iran and Venezuela that take a more hawkish price view. Libya was quick to voice its opposition, saying on Tuesday that the group should not be swayed by short-term price movements.
Prices rallied to $78.47 in electronic trade on Monday after a series of attacks that caused explosions on Mexico's oil and gas pipelines. Chief executive Jesus Reyes Heroles of state firm Pemex said this will not hit the country's oil output or exports but cut off a quarter of its natural gas flow.
OPEC Likely to Keep Oil Quota Unchanged
"At this point, it doesn't seem to be a serious problem but it could potentially pose a longer-term problem, which is why futures reacted so strongly," said Jim Ritterbusch, president of Ritterbusch & Associates, adding there had been an influx of hedge fund money.
Oil prices are 27% up this year and have tripled since 2002 as investors buy into growing consumer demand, real or potential supply disruptions in producers such as Nigeria and Iran and infrastructure constraints such as a lack of refining.
Oil prices are 27% up this year and have tripled since 2002 as investors buy into growing consumer demand, real or potential supply disruptions in producers such as Nigeria and Iran and infrastructure constraints such as a lack of refining.
