Oil prices briefly touched $26 a barrel here Friday after a top OPEC official said members of the oil-exporting group were in agreement to cut output if prices remain low.
Benchmark North Sea Brent crude for delivery in February climbed to $26 in late afternoon trade before easing back to $25.84. It had closed Thursday at $25.35.
In New York, the reference light sweet crude February contract closed up 14 dollars at $28.14 overnight. Prices advanced quickly in early trading after OPEC secretary general Ali Rodriguez said general consensus had been reached on the need for a production cut if oil prices remained below 22 dollars a barrel over the next 10 working days.
The organization would then cut output by 500,000 barrels a day, and producers outside OPEC such as Angola, Kazakhstan, Mexico, Oman, and Russia would cooperate to reduce supply, he said in Caracas after the close of London trade.
Analysts had become increasingly convinced recently that OPEC would tighten its taps when it meets on January 17 in Vienna.
But there had been uncertainty over whether the group would cut production under its stabilization mechanism agreed in March.
Under the informal agreement, the organization agreed 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.
OPEC said on Friday that its benchmark price had risen to 23.15 dollars, remaining within the $22-28 target band for the third day in a row.
Prices nevertheless remain substantially lower than the peaks seen last autumn when dwindling stocks caused prices to surge to 10-year highs in excess of $35 a barrel.
"The market sentiment is that the Organization of Petroleum Exporting Countries will cut production" because of rising prices, said BNP Paribas commodity trader Max Davies.
"I think prices will continue to progressively rise next week, Brent could reach $26.50-to-$27 a barrel," he added.
The latest snapshot of US crude inventories from the US Energy Department on Thursday showed a 1.8-million-barrel draw last week, contradicting unofficial estimates from the American Petroleum Institute which said on Wednesday that stocks had increased by 64,000 barrels.—AFP.
©--Agence France Presse.
© 2001 Mena Report (www.menareport.com)
