Oil prices bounced back up above $26 a barrel here on Monday during a lull in trading ahead of a meeting in Vienna this week of OPEC ministers, who are expected to agree on a big production cut.
Reference Brent North Sea Brent for February delivery rose to $26.16 a barrel from $25.75 a barrel at the close on Friday.
In New York, the light sweet crude February contract jumped 64 cents on Friday to $30.05 a barrel. The US market was shut on Monday for the Martin Luther King holiday.
The OPEC basket price of a mix of crudes stood at $24.43 on Friday, up from $24.23 on Thursday, OPECNA said.
With the US markets shut, traders here were looking forward to an early close.
In the meantime, they mulled the latest clues from the Organization of Petroleum Exporting Countries (OPEC), which is meeting on Wednesday to discuss output quotas.
Most market watchers were betting the group would cut output by about 1.5 million barrels per day despite pleas from consuming nations for less drastic measures.
Algerian Oil Minister Chakib Khelil, who took over the OPEC presidency at the beginning of the year, said on Sunday that the meeting would "very probably" result in a reduction of 1.5 million barrels a day.
"Most people are talking about somewhere near 1.5 million, and there are a few who are talking about around two million," he told AFP in Vienna.
"I believe that the position will be between 1.5 and two million barrels per day."
However, he said the group had not yet decided whether the cut would be made in one go or in several phases. "All that is up for discussion," he said.
Asked about a US call for a production cut of one million barrels per day, in two phases, he said: "We could go bit by bit ... but if there is a dramatic collapse, it would be difficult to find a consensus."
If a limited decrease failed to work, oil stocks would be very high by the time of OPEC's next meeting in March, he said.
"In that case we would have to cut by much more, maybe 2.0 or 2.5 million bpd (barrels per day)."
Prospects of an output cut have set alarm bells ringing in the United States, the world's largest consumer of oil.
US Energy Secretary Bill Richardson ended a four-day tour of oil producing Gulf nations on Monday with a plea to OPEC to resist the temptation of large production cuts.
"I come today with a message that oil-producing countries should not act precipitately and make severe cuts in production," Richardson told a press conference in Kuwait.
Kuwait, like Saudi Arabia, the United Arab Emirates (UAE) and Qatar, which Richardson also visited over the weekend, said it shared the US aim of achieving stable oil prices, but refused to give any promise on trimming the proposed output cuts. – (AFP, London)
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com )