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Oil erases gains from Saudi king's death

Brent holds below the $50 mark with few signs of shift in OPEC output policies.

By Daniel J. Graeber

NEW YORK, Jan. 23 (UPI) -- With few signs of a shift in oil policy from Riyadh, crude oil prices were mixed after the brief overnight rally that greeted the death of Saudi King Abdullah.

Brent crude oil prices gained about 3 percent following the announcement from Riyadh the 90-year-old monarch had died from pneumonia. A November decision from Saudi Arabia, the tacit leader of the Organization of Petroleum Exporting Countries, to keep output steady added durability to the bear market for crude oil.

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Successor King Salman bin Abdulaziz showed no indications after taking the throne Friday he'd change the government's standing. Riyadh had defended its position by saying it needed to ensure it was holding its position in the global oil market.

By the opening bell on Wall Street, Brent crude oil had drifted back down, trading up about three quarters of 1 percent to just under $49 per barrel for the March contract. The price for West Texas Intermediate, the U.S. benchmark, was down a full percent from the previous session to trade at around $46.30 per barrel.

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Crude oil prices are off more than 50 percent from their June values. The International Monetary Fund and World Bank both say the weak price market is hurting leading world economies that depend heavily on export revenues.

OPEC Secretary General Abdullah al-Badri, a Libyan, told delegates Thursday at the World Economic Forum in Davos, Switzerland, cutting production was a zero-sum game. Prices, he said, should be leveling off, adding OPEC decisions are not aimed at rival producers.

"I witnessed [price declines] three or four times during my life and it will rebound very soon," he said. "OPEC producing policy is not directed against Iran, Russia or the United States."

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