Oil prices surge above $62
London - World oil prices rose above $62/barrel on Thursday after the Organisation of Petroleum Exporting Countries said it would slash crude output by 500 000 barrels per day from February 2007.
Dealers said prices were supported also by news that US energy inventories had fallen across the board last week.
New York's main contract, light sweet crude for delivery in January, leapt $1.13 to $62.50/barrel in pit trading on Thursday. It earlier touched as high as $62.72.
In London, Brent North Sea crude for January delivery jumped 76c to $62.09 in electronic deals after earlier surging as high as $62.81.
"Prices have jumped higher ... breaking through $62/barrel on news of Opec's further cuts," said Barclays Capital analyst Kevin Norrish.
Opec ministers meeting in Nigeria on Thursday announced a production cut of 500 000 barrels per day from February 1 next year, and also welcomed new member Angola, the second-biggest oil producer in sub-Saharan Africa.
Cartel members appeared particularly concerned about high oil stocks in rich countries, which Algerian Energy Minister Chakib Khelil said were "the same level as in 1998" - when oil prices crashed to $10/barrel.
"The conference decided to reduce current Opec production by 500 000 bpd with effect from February 1 2007, in order to balance supply and demand," the final statement from Opec said.
Last October, Opec decided to cut its output by 1.2 million bpd from the beginning of November, meaning the total reduction called for by the group is 1.7 million barrels.
The 11-member group, which produces about 40% of global oil supplies, also accepted Angola's application for membership.
Angola, which has fast-growing production in the Gulf of Guinea in West Africa, is to join next January.
The announcement of a second output cut in two months followed warnings that a further reduction could spark sharply higher prices in the coming months, the peak time for oil demand during the northern hemisphere winter.
The influence on oil prices of the Opec cut announced on Thursday will largely depend on whether the cartel succeeds in reducing actual production, analysts believe.
Norrish added: "The key point for us is the risk for Opec to over-tighten the market.
"Oil inventories have eroded substantially over the past few weeks, especially in the US, and in a market going through such a rapid degree of tightening we do not think OPEC should have cut so much."
The US department of energy had revealed Wednesday that inventories of crude oil slumped by 4.3 million barrels to 335.4 million in the week ended December 8. That was much more than the decline of 1.3 million barrels predicted by market participants.
Michael Davies, an analyst with the Sucden brokerage in London, said: "Crude futures were higher (on Thursday), still supported by a larger than expected fall in US crude inventories."
News was from www.news24.co.za
Posted by: www.SouthAfrica-CarHire.com
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