Oil Prices Rise Ahead of OPEC Meeting

Posted 16 October 2006 @ 11:34 am EET     Print     Reprint     E-Mail     Comments

SINGAPORE (Reuters) - Oil prices rose Monday following a weekend announcement that OPEC would meet later this week to discuss production quotas, including the possibility of cutting output by 1 million barrels a day to stop falling prices.

The market also was reacting to the shutdown last week at two of Norway's offshore oil platforms reducing flows by about 10 percent from the world's third-largest oil exporter and an early snowstorm that hit the northeastern United States late last week.

"That reminds the market that the winter heating season is coming, the time when demand for petroleum peaks," said Victor Shum, an analyst with Purvin & Gertz in Singapore.

Light sweet crude for November delivery was up 50 cents to $59.07 a barrel in midmorning Asian trading on the New York Mercantile Exchange. November Brent crude at London's ICE Futures exchange rose 35 cents to $59.87 a barrel.

The Organization of Petroleum Exporting Countries said this weekend that it would hold an emergency meeting Thursday in Qatar to review the market situation and discuss production quotas.

Qatar's Energy Minister Abdullah bin Hamad al-Attiyah said OPEC members also will talk about "the possibility of reducing total oil output by 1 million barrels a day to stop any further decline in prices."

Last week, OPEC President and Nigeria Oil Minister Edmund Daukoru said members had agreed to trim global production by 1 million barrels a day.

Since a mid-July high of $78.40 a barrel, the cost of crude oil has dropped by more than 25 percent. Recently, prices stabilized around the $60-a-barrel level amid expectations that OPEC will try to prevent further sharp declines by trimming its output.

The last time OPEC reduced its output also by 1 million barrels a day was December 2004 when oil traded slightly above $40 a barrel.

In Norway on Friday, safety officials upheld an order to shut down two offshore oil platforms because of defects in their lifeboat systems. The order will delay production of about 280,000 barrels per day of oil from Norway's average daily production of about 2.7 million barrels of crude oil, light oil and natural gas liquids.

On Thursday and Friday, a record snowfall buried western New York state under nearly two feet of snow, leaving thousands of people without electricity.

In other Nymex trading Monday, heating oil futures increased 1.35 cent to $ 1.7313 a gallon while gasoline futures rose 1.43 cent to $1.4827 a gallon. Natural gas prices rose 14.2 cents to $5.801 per 1,000 cubic feet.