Oil dips ahead of OPEC meeting, Greek polls

Thu Jun 14, 2012 6:46am EDT
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By Claire Milhench

LONDON (Reuters) - Oil prices slipped under $97 on Thursday with investors and traders reluctant to add to positions ahead of a meeting later in the day of oil producer group OPEC and Greek elections at the weekend.

Traders are looking for any change in OPEC's output policy given that some view the market as over-supplied, while the Greek election result should deliver some clarity as to whether Greece will stay in the euro.

Brent crude was down 19 cents to $96.94 a barrel at 0642 EDT. U.S. crude was up 16 cents at $82.79, after settling at its lowest level since October 6.

Analysts said the oil market was essentially in "wait and see" mode, but lower equity markets, pessimism about Europe and the expectation OPEC will keep its production target in place were all weighing on oil prices.

When it last met in December, the Organization of the Petroleum Exporting Countries (OPEC) agreed to pump 30 million barrels per day (bpd) but the target was never adhered to and production has risen to almost 32 million bpd, a four-year high, despite sanctions against Iranian crude exports.

Oil prices have tumbled over the last month with many traders viewing the market as over-supplied given the poor economic outlook for the euro zone, slowdowns in the United States and China, and declines in demand for oil products. 㿶

Top oil exporter Saudi Arabia is now under pressure from fellow OPEC producers to cut oil output. Price hawks in OPEC are fretting that slower economic growth will send crude, already off $30 since March, sliding further.

"We think that given the economic situation, above all in Europe, there is a serious threat that prices might fall drastically and so our policy is to defend the production ceiling agreed in December," said Venezuelan Oil Minister Rafael Ramirez ahead of the OPEC meeting in Vienna.   Continued...

A worker collects crude oil sample at an oil well operated by Venezuela's state oil company PDVSA in Morichal July 28, 2011. REUTERS/Carlos Garcia Rawlins