Oil rises above $45 ahead of Opec meeting

Oil rises above $45 ahead of Opec meeting
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First Published: Tue, Dec 16 2008. 02 38 PM IST
Updated: Tue, Dec 16 2008. 02 38 PM IST
Singapore: Oil prices rose above $45 a barrel in Asia on Tuesday, a day before investors expect Opec to announce a big production cut.
Light, sweet crude for January delivery was up 53 cents to $45.04 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract fell overnight $1.77 to settle at $44.51.
Investors are looking to the Organization of Petroleum Exporting Countries, which accounts for 40% of global supply, to announce a substantial reduction of output quotas at its meeting Wednesday in Algeria.
Opec President Chakib Khelil suggested on Monday the group may slash as much as 2 million barrels a day, equaling a cut at the cartel’s last Algeria meeting four years ago.
Khelil said that a fair price for oil would be around $70 to $80 per barrel the benchmark for several Opec members below which they lose money on production.
Mohammed Al-Aleem, Kuwait’s oil minister, said Monday that Opec should cut supply to help balance a large market surplus.
Investors will be watching for evidence Opec members are adhering to any announced cuts, as exceeding quotas has dogged the organization throughout its history.
“That’s going to be the difficult thing,” Burg said. “Opec’s cohesiveness has really deteriorated over the last few years because the world was consuming everything it could produce.”
Many Opec members based their budgets assuming oil prices would be above where they are now. The group’s efforts to bolster prices including output cuts totaling 2 million barrels a day in September and October have been ignored by investors preoccupied with the worst economic slowdown to hit developed countries in decades.
Oil prices, which reached a four-year low at $40.50 earlier this month, have fallen about 70% since peaking at $147.27 in July.
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First Published: Tue, Dec 16 2008. 02 38 PM IST
More Topics: Markets | Oil | Crude | Opec | US |