Updated from 11:10 a.m. EST
Crude oil prices fell Tuesday following reports that the
Organization of Petroleum Exporting Countries
was close to an agreement to increase production.
But because of objections from Iran, the increase is likely to be less than the 1.7 million barrels a day expected by oil traders.
Crude oil for May delivery fell 70 cents to end trading at $27.09 a barrel on the
New York Mercantile Exchange
News reports out of Vienna, where OPEC is meeting, quoted the organization's president, Ali Rodriguez of Venezuela, as saying early Tuesday that the OPEC ministers had reached an agreement in principle on an increase in production.
But Iran, OPEC's No. 2 oil producer after Saudi Arabia, refused to endorse the increase, and the OPEC meeting broke up Tuesday night without a formal announcement. Instead, nine of the 11 members of OPEC are expected to announce Wednesday morning that they would raise their total production by at least 1.45 million barrels a day, starting in April.
Iraq, which did not cut back its production last year, is also excluded from the agreement.
OPEC has come under pressure to increase production after tight supplies caused prices to triple since last year to $34 a barrel.
An increase of even 1.45 million barrels a day would help to ease supply constraints but would not go very far toward rebuilding inventories. Norway and Mexico, who are not members of OPEC, are also expected to step up production by some 300,000 barrels a day, meeting U.S. Secretary of Energy Bill Richardson's hopes for an output increase of 2 million to 2.5 million barrels a day.
Some OPEC nations are already producing oil above their official limits, meaning producers are pumping about 1.2 million of the projected output increase.
Marshall Steeves, a commodities analyst at
, said gasoline prices were likely to creep up as the market awaits the delivery of any additional crude oil.
"We're really in a very serious tight situation especially with gas," Steeves said. "Prices could go up before May when the oil starts to arrive."
The May futures contract for gasoline settled almost unchanged at 88.38 cents a gallon, from Monday's close of 88.40 cents a gallon. But Steeves said gasoline would probably rise back to 90 cents to 92 cents a gallon in the near term.