Oil prices shed some recent gains today as dealers saw enough supply on international markets to blunt the impact of OPEC's shock supply cut.
Brent crude futures in London dropped 13 cents to $26.68 a barrel, easing back after a 4 per cent jump on Wednesday when OPEC's decision to cut production by 3.5 per cent caught traders off guard.
On closer inspection, analysts said OPEC's cut from November 1st of 900,000 barrels per day (bpd) - just a small fraction of the 77 million bpd market - should not strain supply too much, given Iraq's plans to restore production to pre-war levels early next year and strong growth from non-OPEC rivals.
"This was one of those surprises that makes sense," said Boston-based Energy Security Analysis in a report.
"Non-OPEC output just keeps going up, with the former Soviet Union registering a year-on-year jump in output of 900,000 bpd. OPEC was facing the return of Iraq and weakening fundamentals on the back of ample supplies."
New York crude fell 13 cents to $28.16 a barrel. OPEC's decision to tighten supply even as demand for the cartel's fuel rises for winter drew ire from consuming nations concerned about the impact of high energy costs on economic growth.
"I would hope our friends in OPEC don't do things that would hurt our economy," US President George W. Bush said yesterday.