LOS ANGELES, April 7 (UPI) -- The coalition's military progress in Iraq kept oil prices on the run Monday despite OPEC's plans to meet later this month to discuss possible cuts in crude production in an effort to shore up prices.
May crude on the New York Mercantile Exchange fell 66 cents on the day to $27.96 per barrel after hovering slightly above $28 during the morning hours while traders digested reports that OPEC ministers would meet April 24 to presumably talk about the post-war supply situation and the winding down of the "war premium" that had pushed NYMEX to nearly $40 per barrel in February.
London crude fell 10 cents to $24.85 per barrel.
Crude also appeared to be influenced by NYMEX gasoline futures, which dipped 2.78 cents to 84.25 cents per gallon.
The downturn in futures prices should deflate retail gasoline prices somewhat in the United States as the annual summer increase in demand looms. The national average price for a gallon of regular at the pump Monday was $1.637, according to AAA, compared to $1.643 the previous day and $1.683 a month ago.
OPEC officials had little comment Monday on the Vienna meeting's agenda; however, ranking energy officials in the cartel's member nations have recently spoken of a "glut" of crude rather than any shortages caused by the war.
"Things have been very fragile, which is why we've seen the prices where they've been," Daniel Yergin, chairman of Cambridge Energy Research Associates, told the Los Angeles Times. "If there are no further disruptions of supply from other countries, then we'll see the supply-demand fundamentals improving week to week."
OPEC has increased its output this month to a combined 26.3 million barrels per day despite political and ethnic strife that cut production in Venezuela and Nigeria. Nigerian exports are expected to resume in the coming days while Venezuela has gradually returned to normal export levels.
In addition, U.S. and British officials are hoping that Iraq can begin exporting in the near future as well in order to help finance its post-war reconstruction.
Iraq's southern oil fields were seized largely intact by coalition forces early in the campaign and could begin producing this summer once repairs are completed.
The impact that Iraq's return to the market will have on short-term prices is still the subject of debate. Some analysts foresee the low oil inventories in the United States acting to support prices while others opine that the psychological impact that a flush market will have on traders will cause prices to fall further.
