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Oil prices climb as Saudi Arabia hints at OPEC cut
AFP
NEW YORK
Petroleumworld.com 11 28 06World crude prices rose above 60 dollars on Monday after oil kingpin Saudi Arabia suggested that OPEC might need to cut output more at its next meeting in December, analysts said.
Traders also reacted to news that Iraq's main northern oil distribution center was in flames after being struck by two mortar shells.
New York's main contract, light sweet crude for delivery in January, added 1.08 dollars to close at 60.32 dollars a barrel.
In London, Brent North Sea crude for January delivery gained 41 cents to settle at 60.44 dollars a barrel.
Analyst Bart Melek at BMO Capital Markets said a dollar slump on currency markets had also driven up prices.
"The US dollar is at its lowest level in 20 months (against the euro). To the extent that oil is traded in US dollars, a lower dollar mean higher prices almost automatically," he said.
Saudi oil minister Ali al-Nuaimi was reported over the weekend as signalling the possibility of another output cut by OPEC after the cartel agreed in October to take 1.2 million barrels per day (bpd) off the market.
"There is a bit of downward pressure on oil just from the fundamentals but then of course if OPEC steps into the breech and cuts production meaningfully, then of course all bets are off," Melek said.
"But I'm still quite sceptical that will happen."
Cartel members Nigeria, Qatar and Venezuela had already suggested that a cut was on the cards when the Organization of the Petroleum Exporting Countries meets in Nigeria on December 14.
But the market has remained doubtful over how seriously the cartel is implementing the October decision, which was made in a bid to stem a sharp fall in crude prices from summer highs above 78 dollars a barrel.
Last week, the London-based Center for Global Energy Studies said Saudi Arabia was the sole OPEC member to have cut production in November.
Meanwhile in Iraq, also a member of OPEC, an official with the Northern Oil Company confirmed the mortar attack on the oil distribution center.
"This is the first time this installation has been attacked with such force," said the official, who would not reveal the extent of the damage or whether pumping had ceased.
The station is responsible for regulating the flow of crude oil from the country's rich northern oil fields around the city of Kirkuk.
Insurgents have regularly attacked the pipelines in the north, interrupting the flow of crude to the Baiji refinery and the export pipeline to Turkey, but generally left the pumping infrastructure alone.
Exports from the northern fields only resumed in October after a hiatus of several months due to sabotage and was pumping 250,000-300,000 bpd.
World oil prices had begun climbing Friday on reports that Italian oil major ENI was reducing Nigerian exports, after the latest separatist attack in Africa's biggest crude producer.
AFP 27 2057 GMT 11 06
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