Oil prices fell in Asian trade Tuesday in the wake of OPEC powerhouse Saudi Arabia saying the cartel may boost crude output in tandem with a projected demand increase this year.
New York’s main contract, light sweet crude for March delivery, dipped 40 cents to $87.47 per barrel.
Brent North Sea crude for delivery in March was down 34 cents to $96.27.
“Markets have been reacting to the Saudi oil minister,” said Victor Shum, senior principal for Purvin and Gertz international energy consultants in Singapore.
“The Saudi oil minister pushed oil prices lower when he suggested that they could increase production even though (there was) no commitment to do so, and in Asia today, we continue to see that trend,” he said.
The Organization of the Petroleum Exporting Countries (OPEC) could raise output to meet a two percent increase in demand during 2011, Saudi’s oil minister Ali al-Naimi said on Monday.
As non-OPEC oil producers are expected to increase output, OPEC countries will also have the opportunity “to boost their supplies to the global market to meet the rising global demand,” said Naimi.
Speaking in Riyadh, Naimi added that he expected average oil prices to be around last year’s level of $80 despite a recent spike towards $100 a barrel in London.