Oil steady after Nigeria cease-fire

A leading Nigerian militant group agreed to talks to end a conflict that has cut output from Africa's biggest oil producer. OPEC's president said the group may increase production at a December meeting should oil remain above US$75 a barrel.

“Energy demand is still soft, OPEC quotas are being exceeded with impunity while geopolitical variables, like Iran and Nigeria, seem to be fading,” said Edward Meir, an analyst with MF Global Ltd. in Darien, Connecticut.

Crude oil for December delivery traded at US$80.39 a barrel, down 11 cents, on the New York Mercantile Exchange at 11:47 a.m. London time after falling as much as 93 cents, or 1.2 percent, to US$79.57 a barrel. Futures have gained 79 percent this year and touched a one- year high of US$82 a barrel on Oct. 21. Prices have climbed 22 percent in the four weeks to Oct. 23.

The Nigerian cease-fire, which went into effect at midnight Sunday, followed an Oct. 19 meeting between President Umaru Yar'Adua and Henry Okah, leader of the Movement for the Emancipation of the Niger Delta. Okah later conveyed the government's readiness to talk with the group's negotiators, MEND spokesman Jomo Gbomo said by e-mail Sunday.

Brent crude oil for December traded at US$78.95 a barrel, up 3 cents, on the ICE Futures Europe exchange in London after falling as much as 77 cents, or 1 percent, to US$78.15 a barrel.

“We are seeing some kind of profit-taking after the huge jump of more than US$10 in two weeks which was mainly speculative driven,” said Fritsch. “Fundamentally speaking, these high prices aren't justified.”

The Organization of Petroleum Exporting Countries will meet Dec. 22 in Luanda, Angola, to review its production quotas. Some member countries are able to pump more oil if the market requires it, OPEC President and Angolan Oil Minister Jose Maria Botelho de Vasconcelos said in an interview late Sunday.

Oil at US$100 a barrel would make a supply boost inevitable because “it is necessary to maintain the equilibrium,” according to the minister.

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