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Crude prices gain in Asian trade on hints of further OPEC cuts
AFP
SINGAPORE
Petroleumworld.com 11 27 06Oil prices rose in Asian trade Monday after further hints the OPEC cartel could cut production again next month in order to support the market, dealers said.
At 2:43 pm (0233 GMT) New York's main contract, light sweet crude for January delivery, was up 94 cents at 60.18 dollars a barrel.
Trading was to reopen in New York on Monday after the two-day Thanksgiving holiday.
Brent North Sea crude for January delivery gained 39 cents to 60.42 dollars a barrel.
The Organization of the Petroleum Exporting Countries on October 20 approved a reduction in the group's output of 1.2 million barrels a day to stem a fall in crude prices which have fallen from above 78 dollars in July.
But the market has remained sceptical over how seriously the cartel will implement the decision and last week the Center for Global Energy Studies consultancy said Saudi Arabia was the sole OPEC member to have cut production in November.
Victor Shum, senior principal with Purvin and Gertz Inc in Singapore, said the market had received some support from weekend comments by Saudi Arabia's oil minister that further production cuts may be necessary.
OPEC is due to meet again in mid December.
"I think the signal out of OPEC is that they are prepared to defend pricing in the 55 to 60 dollar level," Shum said, noting the cartel's previous cuts have stabilized prices but not raised them.
"Despite the bearish (negative) sentiment on the market at the moment, the risks to the upside remain from cold weather and also from the potential for another OPEC supply cut when the group meets again next month," Sucden analyst Michael Davies said.
Shum said the market has been rangebound for about six weeks and will likely remain that way until factors emerge to influence demand, or until geopolitical factors again make the headlines.
Ultimately, "good old-fashioned demand" is what moves the oil market, he said, and demand typically peaks in the northern hemisphere winter months.
North American weather has been relatively mild this fall, he noted, "so I think when the northern hemisphere winter heating season goes into full force and demand picks up, then that will impact the oil market."
AFP 27 0652 GMT 11 06
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