OUT: Oil bounces off 4-year lows to near USD 43 a barrel
Oil prices bounced off four-year lows to near USD 43 a barrel today in Asia after OPEC's president suggested the group could surprise investors with a large production cut later this month.
Light, sweet crude for January delivery was up USD 2.01 to USD 42.82 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract fell Friday nearly USD 3 to settle at USD 40.81. Prices fell as low as USD 40.50, levels last seen in December 2004.
Chakib Khelil, president of the Organisation of Petroleum Exporting Countries, said Saturday the group could announce a "severe" reduction of output quotas at its next meeting on December 17 in Algeria.
The OPEC head would not specify how deep the output cut would be, but noted that some analysts are predicting a decrease of as much as 2 million barrels per day.
An output decision that startles markets would help bolster plunging oil prices, Khelil said.
"The best way is to surprise them," he said. "I hope it will."
OPEC will likely cut production by at least 1 million barrels a day, said David Moore, commodity strategist with Commonwealth Bank of Australia in Sydney.
"The possibility of OPEC moving to tighten up the oil market is real," Moore said. "As we get closer to the meeting, people may get more wary that OPEC may make a large cut."
OPEC announced a production cut of 1.5 million barrels a day in October and investors largely ignored it, focusing instead on a global economic slowdown that has weakened crude demand.
