Oil Slips to Lowest Since February; Saudis Maintain Shipments

Created by : Francis Goodwin View profile

By Mark Shenk

Oct. 10 (Bloomberg) -- Crude oil in New York fell to the lowest close since February after Saudi Arabia's state oil company told customers in Asia and Europe to expect no cutbacks in their supplies next month.

Saudi Arabia, the largest oil exporter, notified refiners in Japan, India, Taiwan and South Korea that they will get the full volume of oil called for in annual contracts, refinery officials and traders said. Buyers in Europe will get the same as last month. The Saudi move may undercut the plan announced this week by OPEC President Edmund Daukoru to reduce production by 1 million barrels a day.

``History shows that OPEC deals only work when the Saudis are on board,'' said Bill O'Grady, an analyst with A.G. Edwards & Sons in St. Louis. ``Allocating the cuts is always the problem. The poor countries want the rich ones to take the hit and the rich ones will only do that if a cut is in their best interest.''

Crude oil for November delivery fell $1.44, or 2.4 percent, to close at $58.52 a barrel on the New York Mercantile Exchange, the lowest close since Feb. 16. Prices are down 25 percent from the record of $78.40 reached July 14 amid concern that fighting in Lebanon between Israel and the Islamic militia Hezbollah would spread through the Middle East.