MW: February oil rises to above $42 as OPEC talks cuts
NEW YORK (MarketWatch) - February crude-oil futures rose Friday to above $42 a barrel, while the front-month January contract continued trading below $40 a barrel, as OPEC president said the cartel will keep cutting output until prices stabilize.
Crude oil for February delivery, the most active contract, was last up $1.44, or 3.4%, at 43.11 a barrel on the New York Mercantile Exchange.
The front-month January contract, which expires Friday, rose 63 cents, or 1.7%, to $36.85 a barrel. It earlier tumbled more than 7% to $33.44, the lowest level for a front-month contract since April, 2004. The January contract is set to lose more than 20% this week.
"The last standing bulls are rolling over" to buy February contract while "dumping their January oil on the market," said Phil Flynn, vice president at futures brokerage Alaron Trading.
The Organization of Petroleum Exporting Countries, the cartel that controls about 40% of the world's oil production, will continue cutting output, its president Chakib Khelil said on Friday, according to Agence France-Presse.
"We will continue this reduction until the price will stabilize," he said, while blaming the dramatic changes in oil prices to speculators.
"We feel very strongly that what happened in 2008 and what's happening now is due in great part to the speculation," he said, according to AFP.
Khelil's comments came two days after OPEC agreed at a meeting in Algeria a production cut of 2.2 million barrels a day, which failed to prevent oil prices from sliding.
"January [crude] expires on Friday, so OPEC will now be looking at the February contract as the spot pricing benchmark," said Edward Meir, an analyst at MF Global.
After hitting a record high above $147 a barrel in July, front-month crude contracts have tumbled 76%.
Rising inventories
The ongoing global economic crisis has cut into oil consumption and increased crude-oil stockpiles.
Total petroleum products supplies in the U.S., the world's biggest oil consumer, stood at 19.6 million barrels a day last week, down nearly 5% from a year ago, the Energy Information Administration reported Wednesday.
Crude oil inventories at Cushing, where oil traded on the Nymex is delivered, rose to 27.5 million barrels last week, the highest since May 2007, the EIA reported.
Also on the Nymex Friday, January reformulated gasoline rose 3.8% to $1 a gallon and January heating oil gained 3.9% to $1.427 a gallon.
January natural gas futures rose 1.9% to $5.653 per million British thermal units.
Moming Zhou is a MarketWatch reporter based in New York.
Polya Lesova is a New York-based reporter for MarketWatch.
