London: Crude oil rose above $43 a barrel after the Organization of the Petroleum Exporting Countries (Opec) restated its commitment to enact record production cuts announced last week in the face of a global economic slowdown.
Opec is determined to stabilize oil markets, Saudi oil minister Ali al-Naimi said in Doha, Qatar, on Sunday. Oil is poised for the first annual decline in seven years, falling 55% in New York so far in 2008.
Opec is lining up all its big guns to tell the world that the action taken in recent days will push prices higher, said Rob Laughlin, senior broker at MF Global Ltd in London.
Non-Opec members Russia and Azerbaijan signalled that they may trim supplies after Opec agreed to cut output starting January.
Oil surged almost five-fold to reach $95.98 a barrel at the end of last year from $19.84 in 2001. It has fallen 72% from July’s record of $147.27. The January contract, which expired last week, plunged 6.5% to $33.87 a barrel on 19 December, the lowest settlement for a contract nearest to expiration since 10 February 2004.
Futures dropped 27% last week on scepticism that Opec will implement output cuts of 2.46 million barrels a day starting in January. The reduction will be in addition to the 1.5 million barrel-a-day cut the group started in November.