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Sunday, January 25, 2009

Oil rises as Opec output reduced

Posted by Annie bimala

Oil worker in Bahrain
Opec agreed last month to cut output by 2.2m barrels a day

Oil prices have risen as hopes that the oil cartel Opec is complying with its production cuts outweigh new gloomy economic news.

US light crude added $2.80 to $46.47 a barrel. London Brent rose $2.98 to $48.37 a barrel.

Oil consultant Petrologistics estimated Opec production would fall by 1.55m barrels per day in January.

In December, the cartel agreed to cut output by 2.2m barrels a day as prices fell by more than $100 since July.

"I think this [Friday's rise] represents anticipation that the Opec production cuts are really happening after the Petrologistics estimates on January OPEC production," said energy analyst Tim Evans at Citi Futures Perspective.

"It seems that some of the strength [in oil prices] has come as part of a wider commodities rally," said Peter Beutel, president of Cameron Hanover.

Forecasts for cold weather in the US Midwest and the Northeast also supported heating oil prices, as the region is one of the biggest heating oil markets.

Oil prices were as low as $35 a barrel last week.

Global prices have fallen sharply since last summer as demand has weakened as a result of the economic slowdown.