Oil prices fell sharply Friday as nervous market participants worried about talks between two key OPEC committees trying to work out an agreement to bolster sagging world markets by cutting the cartel's excess oil output.
West Texas Intermediate, the benchmark U.S. crude for immediate delivery, slipped 9 cents to $14.37 a barrel in trading on the New York Mercantile Exchange.In U.S. Gulf Coast spot trading, where oil is sold to the highest bidder, West Texas Intermediate dropped 35 cents to $14.75 a barrel.
Analysts said skittish traders reacted to every headline that emerged from Madrid, where eight leading OPEC ministers that comprise the group's price and long-term strategy committees were holding talks on revamping the 13-nation cartel's production restraint accord.
"The market lived or died on the latest rumor," said Peter Beutel, analyst with Elders Futures Inc. in New York.
In Madrid, the panels failed to reach a consensus on new production policies at formal sessions Thursday and Friday. The widely ignored quota system now in effect limits total OPEC output to 15.06 million barrels a day for 12 of its 13 members, excluding Iraq, which is pumping about 2.7 million barrels a day.
Current estimates put actual OPEC output at between 21 million and 22 million barrels a day. The excess production has exacerbated a worldwide glut that has driven down prices for OPEC crude by 30 percent since April, from an average of $15 a barrel to $11.
Late Friday, Iraqi Oil Minister Issam Abdul Raheem Al-Chalabi told reporters he was optimistic after meeting on an individual basis with ministers of several other OPEC countries, which he declined to name.
"Everyone is trying to reach an agreement, and I think we can do so," Al-Chalabi said.
Iraq has said it would be willing to rejoin the OPEC quota system at a level of about 2.4 million barrels a day, equal to its Gulf war foe Iran's current limit. Iran repeatedly has rejected the Iraqi demand for an equal quota.
OPEC secretariat sources said the Madrid talks may continue through Sunday, indicating a possible breakthrough in negotiations.
The two committees have no policy-making powers, but they can make recommendations to the full cartel, which is scheduled to gather at a plenary session Nov. 21 in Vienna.