Oil prices fell heavily yesterday as leading OPEC power Saudi Arabia pushed the cartel for a big two-million-barrel-a-day output increase, to fill a gap left by a five-week-old strike in Venezuela.
By late yesterday US light crude had slumped $1.05 to $31.06 (€29.81) a barrel, extending Monday's 98-cent loss. London Brent blend shed 70 cents to trade at $29.50 a barrel.
Leading OPEC power Saudi Arabia wants to add between 1.5-2.0 million barrels daily to supplies to stop high prices hurting world economic growth, an OPEC delegate said.
Dealers said the additional volumes proposed by Saudi were larger than expected. They would come on top of official limits now of 23 million barrels per day (bpd).
But several officials in the cartel expressed scepticism over whether the group would do that much, saying the top end of the Saudi plan looked like a negotiating position.
Most expect an agreement in the range 1.0-1.5 million bpd, the volume Kuwait's Oil Minister Sheikh Ahmad al-Fahd al-Sabah says is favoured.
The group is considering an emergency meeting on January 12th to finalise the deal. Otherwise it could seal the deal by telephone.
An increase of a million or so looks more realistic because the Venezuelan strike is temporary and eventually Venezuela will come back,"said one broker, who added that two million seemed like a lot.
Oil has retreated from a two-year peak of $33.65 a barrel for US crude since the end of December when it was first revealed that OPEC was discussing an output increase.
