MW: Crude rises over 2% as OPEC mulls production cut
By Moming Zhou, MarketWatch
NEW YORK (MarketWatch) -- Crude-oil futures rose more than 2% Monday, rallying for a second session as the chief of the Organization of Petroleum Exporting Countries said the cartel should cut production quotas at Friday's meeting.
OPEC should order a "substantial" cut in oil output at its emergency meeting in Vienna, Algerian Energy Minister and current OPEC President Chakib Khelil said Saturday, according to media reports.
Crude for November delivery rose $1.74, or 2.4%, to $73.58 a barrel in early electronic trading. It rallied to $74.28 overnight. Crude had lost 8% last week on increasing concerns that the global financial crisis will lead to a decline in oil demand.
Oil was rising "on heightened expectations that OPEC would reduce production," wrote Nimit Khamar, an energy analyst at Sucden Research. Speculation that "financial crisis may be easing" also contributed to the rally.
OPEC, the cartel that controls 40% of the world's oil production, last Thursday brought forward its meeting, originally scheduled on Nov. 18, to Friday.
Pressures have been mounting within the 13-member group to cut production as crude prices have slumped by more than 50% from its all-time high of $147.27 hit in July.
"There will be a reduction in production at the next extraordinary meeting of OPEC, and it will have to be a substantial one to get the balance right between supply and demand," Khelil said, according to AFP.
Potentially adding more downward pressures on oil prices, the economy of China, which accounts for the bulk of growth in global oil demand, decelerated more than expected in the third quarter, marking the fifth straight quarterly slowdown.
China's economy expanded 9% in the third quarter after growing 10.1% in the second, according to data released Monday by the National Bureau of Statistics. See full story.
Also on Nymex to start the week, the other energy futures rallied. November reformulated gasoline rose 2.49 cents, or 1.4%, to $1.6910 a gallon, and November heating oil gained 5.34 cents, or 2.5%, to $2.1863 a gallon.
November natural-gas futures climbed 14.9 cents, or 2.2%, to $6.9350 per million British thermal units.
