Oil prices continue to creep up on US market
Oil prices continued to creep up here Wednesday, boosted by repeated calls from oil producers for a cut back in output.
The price of a barrel of light sweet crude for February delivery moved up 79 cents to $28.
On Tuesday, the price rose 41 cents to end the day at $27.21.
In London, Benchmark Brent North Sea crude for February delivery was being traded at $24.52 a barrel by late afternoon, up from $24.30 at the close on Tuesday.
"The market is absorbing news that OPEC is certainly likely to cut production at their January 17 meeting," said Robert Laughlin, a market watcher with the GNI brokerage.
"It's a matter of how much," he added. "The Saudis and the Kuwaitis have called for cuts of approximately a million to 1.5 million barrels a day. That is why the market is higher than it was late last week."
Kuwait said Wednesday that the Organization of Petroleum Exporting Countries was likely to cut production by two million barrels a day in a bid to prop up prices.
"The overall cuts in crude production within OPEC and outside the organisation will probably amount to two million barrels" a day, Kuwaiti Oil Minister Saud Nasser al-Sabah was quoted in local newspapers as saying.
On Tuesday, OPEC said that its benchmark price used to help set output quotas had remained below its target band of $22-28 for over a week.
Under the agreement, the organisation pledged to increase production by 500,000 barrels a day if its benchmark price stayed above $28 for 20 working days, or cut output by the same amount if the price stayed below $22 for more than 10 working days.
Had the price rested below $22 until January 8, it would have been outside of the band for 10 working days. But OPEC announced on Wednesday that the benchmark price had risen back above $22.
Analysts said they did not therefore expect the mechanism to trigger an output cut ahead of the Vienna ministerial meeting. But they added that it seemed increasingly likely that OPEC would decide to tighten its taps at the meeting.—AFP.
©--Agence France Presse.
© 2001 Mena Report (www.menareport.com)