LONDON, Sept 8: Oil prices rallied on Monday on expectations that the Organisation of Petroleum Exporting Countries would begin cutting output as prices hover close to the $100 a barrel, traders said.

The market was also relieved by the US government’s rescue of the country’s two giant mortgage finance providers and additionally rebounded from five-month lows on worries that Hurricane Ike could threaten production US facilities in the Gulf of Mexico.

New York’s main contract, light sweet crude for delivery in October, rose 71 cents to $106.94 a barrel.

Brent North Sea crude for October climbed 72 cents to $104.81.

Trading in Brent was temporarily suspended on Monday owing to a technical glitch.

“Oil prices are being supported by concerns over production problems in the Gulf of Mexico,” said Sucden analyst Nimit Khamar.

“Market participants will also be keeping an eye on the Opec meeting, where Opec is expected to keep production unchanged. However, Opec could still cut their unofficial over-production.”

Ahead of Opec’s policy meeting in Vienna on Tuesday, Iran led calls for the cartel to slash output by ensuring that members pumped only their official quota and not more.

Oil prices have plummeted from record highs above $147 in July, with the Opec meeting seen as a test of what price level the cartel wants to defend.

Most analysts surveyed by AFP expected the 13-nation group to agree to trim output informally before waiting until later, possibly at a scheduled gathering in December, to alter its official target.

The trimming would be achieved by members, mainly powerhouse Saudi Arabia, agreeing to cut their excess production above their Opec quota, which would remove oil from the market but not amount to a formal change in policy.

“Of course there is an oversupply,” Iranian Oil Minister Gholam Hossein Nozari said on Monday as he arrived in the Austrian capital, underlining Tehran’s desire to see the organisation enforce its quota system.—AFP