World oil prices increase

WORLD oil prices climbed further yesterday after a surprise decision by the Organisation of Petroleum Exporting Countries to tighten oil supplies that analysts said will put the heat under crude markets this winter.

US light crude rose 39 cents to $28.63 a barrel and London Brent added 38 cents to $27.05.

The gains came on top of a dollar-a-barrel surge on Wednesday after OPEC agreed to cut output to prevent a build-up in petroleum inventories during the fourth quarter.

“This is a powerful message from OPEC and unless we see significantly higher production from Iraq, which looks unlikely, prices are going up,” said Brian de Clare, head of global commodity marketing at ABN Amro.

“We could see it test $33 for Brent, $35 for US crude.”

OPEC agreed to reduce production for 10 members by 900,000 barrels per day to 24.5 million bpd, effective November 1.

It cited rising inventories, a fall in prices this month and the gradual return of Iraqi crude to the world market.

“We want to protect the $25 price,” said OPEC president Abdullah al-Attiyah of Qatar.

US oil had fallen $2 a barrel from early September but was still high enough to value an index of OPEC crudes near the middle of its $22-$28 price range.

“It surprises me that they were prepared to cut at these prices,” said Nigel Saperia of Swiss trading house Glencore.

OPEC was influenced by bullish forecasts from Iraq’s new oil minister, attending Baghdad’s first post-war OPEC meeting, for Iraq to overcome security problems and restore post-war output early next year.