Crude price has dropped to a little below $95, following increase on speculation of boost in crude output.
The speculation, is coming for the second time this year, as investors speculate an increase in production output, as record price threatens to stifle economic growth.
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Preparing for the December 5 meeting, Saudi Arabia, the biggest producer in the OPEC list pumping nine million barrels a day, oil Minister, Ali al-Naimi, said in Singapore yesterday that October production averaged 8.75 million barrels a day, according to estimates compiled by Bloomberg.
According to the agency report, a senior broker at MF Global Limited in London, said "signs that OPEC is delivering on its promise to provide more barrels are taking the edge off prices on Tuesday."
He said our concern is the demand scenario, high prices and a slowing global economy, which suggest that the desire for crude oil could fade. Crude oil for January delivery fell as much as $2.46, or 2.5 per cent, to $95.24 a barrel in after-hours electronic trading on the New York Mercantile Exchange.
Crude traded in New York fell 48 cents, or 0.5 per cent, to $97.70 a barrel on Monday. It reached $99.29 on November 21, the highest since trading began in 1983.
Tony Nunan, Risk Manager for Mitsubishi Corp, said OPEC has been making a lot of noise about an output increase and that ís why we see weak numbers."
Technical factors were also pressuring the market after prices surged to a record of $99.29 a barrel last week, traders said.
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"The market is taking a breather from this $100 talk, I wouldn't read too much into this sell-off," a London-based trader said.
Al-Naimi said the kingdom, the world's top exporter, had raised production to nine million bpd, slightly more than its target under an OPEC deal, to boost output from November 1.