Analysts said that amid the uncertain global economy, underscored by the plunge of U.S. crude oil prices to below $75 a barrel after Standard and Poor's Corp. downgraded the rating for U.S. sovereign debt, OPEC is likely to be extremely vigilant about defending prices in order to meet member nations' budget needs.
MF Global's Ilczyszyn said that if the U.S. economy shows signs of further weakness, "we may get dips below $80, but no sustained moves" for U.S. benchmark crude, as OPEC would likely lower output to support prices.
Lawrence Eagles, oil analyst at J.P. Morgan, said Kuwait's current budget, with high social spending and heavy fuel subsidies, requires export prices that translate to around $96 for North Sea Brent crude. That reinforces his view that OPEC would cut output to reverse a sustained fall in Brent below $90 a barrel, he said.
September-delivery gasoline blendstock futures settled 5.23 cents higher at $2.8745 a gallon, while September heating oil futures settled 4.04 cents higher, at $2.9441 a gallon. Heating oil futures have gained 6.5%, or nearly 18 cents a gallon, in the last four trading days on anticipation of continued high export demand, even if demand in the U.S. weakens, traders said.