(1888PressRelease)
April 28, 2009 - Oil prices fell toward $50 a barrel Monday in Asia as investors mulled comments from OPEC suggesting the price was too low for companies to justify new investments in crude production.
Benchmark crude for June delivery was down $1.12 to $50.43 a barrel by midmorning in Singapore, in electronic trading on the New York Mercantile Exchange. The contract Friday jumped $1.93 to settle at $51.55.
Oil has traded near $50 a barrel this month, about a third of its record high in July, as the global economy remains weak and traders grapple with an uncertain outlook for recovery.
On Sunday, Abdalla el-Badri, Secretary General of the Organization of Petroleum Exporting Countries, warned that oil prices of $50 per barrel are "insufficient for continued investment" and urged a $70 barrel.
Algerian Energy Minister Chakib Khelil predicted on Sunday that prices would rise to $60 a barrel by the end of this year.
"For high-cost projects, you probably do need a higher price level to be economically viable," said Stephen Yang, an analyst with Seedorf Luxman & Partners in Singapore. "Once activity in the global economy comes back, we could see supply constraints leading to higher prices," he said.
"People are starting to think longer term about the supply side," the Seedorf Luxman & Partners analyst said..
But Kuwaiti Oil Minister Sheik Ahmed Al Abdullah Al Sabah said Sunday that a price of around $50 a barrel is "reasonable" for crude considering the global economic slowdown. He said OPEC should wait for the results of massive stimulus packages by governments around the world before deciding whether to cut production at the cartel's next meeting on May 28. OPEC has announced output quota reductions of 4.2 million barrels a day since September.
In other Nymex trading, gasoline for May delivery fell 1.70 cents to $1.43 a gallon and heating oil slid 2.13 cents to $1.35 a gallon. Natural gas for May delivery dropped 5.6 cents to $3.24 per 1,000 cubic feet. In London, Brent prices fell 94 cents to $50.73 a barrel on the ICE Futures exchange.
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