World oil prices bounced higher today in a modest correction to yesterday's huge fall, which was the biggest single day's drop since the Gulf War in 1991.
Brent crude futures were up 51 cents at $22.53 a barrel this morning after dipping to an intra-day low of $21.70 yesterday, the lowest level for 17 months.
Yesterday’s falls were triggered by the receding prospects of an oil supply disruption in the Middle East, as major oil powers said they would keep oil supplies flowing, and a faltering demand outlook on concern the September 11th suicide attacks would help tip the global economy into recession.
Traders have become increasingly convinced the OPEC producers' cartel is unlikely to change output policy when it meets this week.
OPEC has managed to keep oil in the middle of a $22 to $28-a-barrel target range for the group's reference basket of seven crudes for much of this year by a series of supply cuts, which have removed 3.5 million barrels per day from the world market.
But the price of the basket dropped out of the cartel's preferred range yesterday, plummeting to $20.51 a barrel from $23.98 on Friday.
OPEC looks powerless to act again as US demands for cooperation in the wake of the attacks make it almost impossible for OPEC's most influential member, Saudi Arabia, to support any action to rescue prices.
Industry consultants who track OPEC supplies reckon the 10 members with supply quotas were between 1.3 million and 1.4 million barrels per day (bpd) over production limits of 23.2 million bpd in September.