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LONDON, Oct 29: The price of oil was lifted here on Monday by the prospect of an Opec production cut and speculation that the United States might buy crude to replenish its strategic reserves.
A barrel of benchmark Brent North Sea crude for December delivery rose to $21.37 from 21.02 on Friday evening.
In New York, December-dated light sweet crude futures edged up two cents a barrel to $22.03 on Friday.
Traders were keeping an eye on talks in Vienna between experts from the 11-nation Organization of Petroleum Exporting Countries (Opec) and six non-Opec states, notably key producers Russia and Norway.
Opec kingpin Saudi Arabia indicated at the weekend that a cut was almost certain by next month, providing some support for crude prices that have slumped in the aftermath of the September 11 suicide attacks on US targets.
Saudi Oil Minister Ali Nuaimi said in Abu Dhabi that the cartel would take all necessary means to maintain its 22-28 dollars target band.
Opec’s own basket oil price stood at $19.18 on Monday, its fourth week below the cartel’s $22-28 target band.
Opec energy ministers have hitherto held back from cutting output since the strikes amid political pressure, but are now expected to take action at their next meeting on November 14 in Vienna.
Opec ministers are moreover trying to coordinate action with non-Opec states to ensure that any output cuts they make are not undermined by other producers.
Traders were also mulling reports that the United States was considering buying crude to replenish its Strategic Petroleum Reserve (SPR) while prices are low, market watchers said.
VIENNA: Experts from the Opec oil cartel met on Monday with non-Opec producers to seek support for an output cut to boost crude prices, which have slumped to two-year lows since September 11.
The 11-member Opec is warning of an oil price war if major non-Opec producers like Norway and Russia do not coordinate action to prop up prices.
The idea is to present our case that they (non-Opec states) have to understand the real distastrous conditions that could result if they don’t cut, or at least freeze production, an Opec source told AFP.
Opec, which produces 40 per cent of the world’s crude, faces a dilemma in responding to the price slump, which is a serious blow to its member countries’ oil-dependent economies.
Normally it would slash production to boost prices, but is wary of doing so when major industrialized economies are feared to be heading into recession, hastened by the September 11 terror attacks.
Opec ministers meet again on November 14, and are trying to co-ordinate action with non-Opec states, to ensure that whatever action they take achieves the desired effect on prices.
Monday’s meeting was not expected to produce a decision, but could result in recommendations for next month’s ministerial gathering. —AFP
