NEW YORK, April 12: Oil prices turned higher in late trade on Friday after signals from within Opec that the cartel could remove up to two million barrels per day from world markets to prevent oversupply.
New York’s benchmark light sweet crude contract for May delivery reversed course in late trade and jumped 68 cents a barrel to $28.14.
In London, the reference Brent North Sea crude for May delivery rose cents to $24.72 a barrel.
The markets showed a delayed reaction to indications from Organization of Petroleum Exporting Countries (Opec) that the cartel could slash production if it stuck rigidly to its production quotas to keep prices from sliding.
It’s really the news that Opec could reduce its output that started the rally, said Jim Still, an analyst at Refco.
There’s a good chance Opec can meet this two million barrel cut as they are close to full capacity. I don’t think (New York) prices are going to break below $26.
The market is oversupplied by two million barrels a day. What we need to do is to take these off the market ... by strictly sticking to our quotas, an Opec source told AFP in Vienna.
The organization — which is keen to avoid a precipitous price slide of the sort that followed the end of the 1991 Gulf conflict — is expected to hold a meeting on April 24 to consider a cut in production.
Thursday’s price falls had come as traders anticipated the imminent return of Iraqi oil to the market after US-backed Kurdish forces took the northern oil city of Kirkuk.
Although the city remained unstable on Friday, US-led forces now hold both major oil centres in Iraq, having seized control of the southern fields near the start of the three-week campaign.
Analysts said the market was hopeful that with little damage reported to extraction infrastructure, oil production could resume relatively soon, which was pushing prices downwards.
No major damage to Kirkuk’s oilfields have been sustained after Kurdish commanders captured the city, said Barclays Capital analyst Kevin Norrish.
Kirkuk is the source of around a third of Iraq’s pre-war crude oil production of around 2.4m bpd and is also the location of a number of potential new oilfield developments.—AFP
