NEW YORK – U.S. oil prices settled below $43 on Monday on continued profit-taking as producer-group OPEC eyed increases in the coming months, countering worries over stumbling Iraqi oil exports.
U.S. light crude settled down 90 cents to $42.28 a barrel on the New York Mercantile Exchange (search) after falling to $41.30 a barrel midday, the lowest level since July 26. Oil has dropped more than $7 from the record highs near $50 a barrel earlier in the month as hedge funds, responsible for part of the recent price surge, take profits.
Brent crude trade on London's International Petroleum Exchange was shut for a public holiday.
Despite last week's slide, oil prices remain about a third higher than at the end of 2003 as producers pump close to full tilt to match soaring demand.
The head of the OPEC producers cartel said on Monday that the group, which controls more than half of world exports, aimed to increase spare output capacity by about one million bpd in the next few months in an effort to bring down sky-high prices.
The Organization of Petroleum Exporting Countries (search) is estimated to be pumping close to 30 million bpd, its highest level since 1979, in an effort to dampen this years price rally.
"...In response to expected demand growth in the near future, member countries have plans in place to further increase production capacity by around one million bpd toward the end of this year and into 2005," OPEC president Purnomo Yusgiantoro said in a written statement handed to reporters in Jakarta.
"In addition, plans for additional capacity expansions are available and could be enacted soon. However, this capacity would, typically, become available around 18 months after commencement of this process."
Only OPEC's Saudi Arabia has any significant spare capacity within the 11-member producers cartel, which is due to meet on Sept. 15 in Vienna to review output policy.
Iraqi oil exports ran at a reduced 1.4 million barrels per day (bpd) on Monday, compared with two million bpd a week ago, and an Iraqi oil official said work to repair sabotaged pipelines would take five days.
Fire fighters on Sunday battled to put out a blaze in the South Rumaila oilfield after spilt oil and gas from damaged pipelines ignited.
Turmoil in Iraq and frequent attacks on oil infrastructure have been a major factor in underpinning the sharp rally in crude prices this year.
World supplies are struggling to keep up with a surge in demand, which is growing at the fastest pace in 24 years, leaving little room for any hiccup in the supply chain.
Russias biggest oil exporting firm Yukos (search) faces a deadline this week from tax authorities over a multi-billion dollar unpaid debt, but analysts expect the company to be given some breathing space, with little likelihood of disruptions to the companys production and exports.
President Vladimir Putin assured President Bush last week that Russia, the worlds second-biggest exporter, would not allow overseas sales to fall at a time when oil prices were hovering close to historic highs.