Oil rises above $51 on hopes of production cut by Opec

Oil rises above $51 on hopes of production cut by Opec

London: Oil rose by almost $2 (Rs100) a barrel on Monday as investors considered the prospect of a further supply cut by the Organization of the Petroleum Exporting Countries (Opec) and as stock markets rallied following the US government’s rescue of Citigroup Inc.

Venezuela said on Sunday that Opec should cut supply further, while Iran made similar remarks on Monday. Opec oil ministers meet for informal talks in Cairo on 29 November.

“The demand scenario suggests we need another cut. But at the end of the day, there is a certain scepticism in the marketplace that Opec is going to deliver at this weekend’s meeting," Rob Laughlin, broker at MF Global Ltd, said.

US crude rose $1.72 to $51.65 by 1210 GMT. The contract had dipped to a three-and-a-half-year low of $48.25 on Friday. Brent crude was up $1.53 at $50.72. The US government’s bailout plan for Citigroup, its biggest rescue of a bank yet, boosted equities and supported some commodities.

Rising equities and increased demand for winter heating fuel should bolster oil, some traders said. UK’s FTSE 100 stock index gained almost 5%.

“The FTSE is up so that should provide support, as should the colder weather," said Christopher Bellew, a broker at Bache Commodities Ltd. “All the considerable amount of bearish data may finally be priced in."