NEW YORK, Jan 13: World oil prices climbed to nearly $53 a barrel on Friday, recovering from 19-month lows caused by warm winter temperatures in the northern hemisphere.
But analysts warned that prices could still fall significantly unless the Organization of the Petroleum Exporting Countries (Opec) decides to cut its oil output further.
New York's main oil futures contract, light sweet crude for delivery in February, gained $1.11 to close at $52.99 a barrel.
In London, the price of Brent North Sea crude for February delivery rose $1.25 to settle at $52.95 a barrel.
On Thursday, both the London and New York markets had closed at their lowest levels since May 2005, and crude futures have slumped by 14 percent since the start of 2007.
The mild weather in America has impacted (prices) significantly, said Adrian Jackson, an energy analyst at Investec Asset Management.
With the world's biggest energy-consuming nation enjoying an unusually warm winter, inventories of US petroleum products including heating fuel have been going up.
Tony Nunan, an analyst at Mitsubishi Corp. energy risk management, said the market slump could resume until Opec cuts production again so as to put a floor under prices.
I think OPEC should make further production cuts, Nunan said, noting the mild winter weather had not been accounted for in the cartel's prognosis for demand.
The group decided at a meeting last month to cut output by 500,000 barrels per day (bpd) from February, after an announced reduction of 1.2 million bpd in November.
Investec's Jackson said that Opec needs to slash production to avoid a surplus of crude building up.
That's what the market is afraid of. So Opec needs to cut its supply, he said.
Nunan noted, however, that crude prices were unlikely to drop below the strong support level of $50 a barrel in the coming week.
At the close of 2006, the price of oil was above $60 a barrel, after hitting record highs above 78 dollars in the middle of the year.
“At these price levels, the implication is that there will soon be a test of 50 dollars. However, there seems to be a pause in selling,” Fimat analyst Mike Fitzpatrick said.
With the Opec basket (price) falling under 50 dollars for the first time since May of 2005, there is talk that an emergency meeting may be held on January 20.”One factor driving up oil prices last year was geopolitical jitters linked to countries such as Nigeria, where separatist unrest has ravaged the oil industry in Africa's biggest crude exporter.On Friday, nine South Koreans and one Nigerian taken hostage by gunmen in southern Nigeria were released, a government spokesman for the southern state of Bayelsa told AFP.
A further nine foreigners -- oil workers or sub-contractors -- are still being held in the Niger Delta region of southern Nigeria. They are five Chinese workers, three Italians and one Lebanese.
Elsewhere Friday, Russia and Belarus signed a formal agreement resolving an oil transit row that had disrupted supplies through the main export pipeline to Europe, Russian media said.--AFP
