Oil rises as OPEC hints at output cut
Nigeria, the world’s number eight oil exporter, plans to reduce supplies from October 1 after consultations with other OPEC producers, a senior Nigerian oil industry source said yesterday.
But fellow OPEC member Kuwait has not trimmed production, according to a Gulf oil source, who added there has been no directive so far to change output.
US crude rose 79 cents to $63.75 a barrel adding to gains of almost $2 the previous session. London Brent was up 99 cents at $63.20 a barrel.
Oil prices have fallen from a peak of $78.40 in July, prompting uneasiness among some OPEC members.
The Nigerian oil industry source said that Nigeria was joining Saudi Arabia, the world’s biggest oil exporter, and Kuwait in an unofficial deal to trim oil supply from October 1.
However, this has not been confirmed by either country.
“Nigeria will cut by five% from October 1 because of the unofficial discussions between OPEC members,” the Nigerian source said, asking not to be named.
Edmund Daukoru, OPEC’s president, had said on Tuesday: “something needs to be done to steady the price”.
But Kuwaiti oil minister Sheikh Ali al-Jarrah al-Sabah said yesterday that with US crude above $61, most OPEC ministers were content with prices and not inclined now to cut output.
Last week, Ali al-Naimi, oil minister for Saudi Arabia also described a US crude price of around $62 as reasonable.
OPEC speculation helped boost prices by almost $2 on Wednesday, even after a weekly report showed a big jump in US fuel supplies.
“The market is astonishingly strong,” said Christopher Bellew, a broker at Bache Financial. “Really it seems to be buying by funds, either short-covering or adding to their length because they’d got rid of a lot of their length.”
Oil has fallen from its July peak because of rising US fuel stocks, easing economic growth and diminishing tension over Iran’s nuclear stand-off, the steepest drop since the 1991 Gulf War.
“We had such a continuous drop in prices, so at some stage it was obvious we would see some rebound,” said Frederic Lasserre, head of commodity research at Societe Generale. “It’s just purely technical.”
Swelling fuel inventories in the United States and talks between the European Union and Iran to resolve the dispute over Tehran’s nuclear work suggest the rally may be short-lived, analysts said.
European Union foreign policy chief Javier Solana said yesterday that he had failed to reach a deal with Iran’s chief nuclear negotiator on Tehran’s atomic ambitions, but they had paved the way for further talks.
Iran is the world’s fourth largest oil exporter, and an agreement to end the standoff could lead to more weakness for oil prices, analysts said.
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