BLBG: Crude Oil Rises as OPEC Signals Its Resolve to Cut Supplies
Crude oil rose to an eight-day high as the Organization of Petroleum Exporting Countries signaled its resolve to support prices by reducing supplies.
The 11 members of the OPEC bound by quotas will cut supplies 3.8 percent to 25.3 million barrels a day in February, according to consultant PetroLogistics Ltd. The group may cut production further when it meets next on March 15, Algerian oil minister Chakib Khelil said.
“OPEC is under strong pressure to cut again in order to stop a worldwide build-up in inventories,” said Gerrit Zambo, an oil trader at BayernLB in Munich.
Crude oil for April delivery gained as much as 77 cents, or 1.9 percent to $40.80 barrel, in electronic trading on the New York Mercantile Exchange. The contract traded for $40.34 at 1:48 p.m. London time.
Oil supply from 11 OPEC members will average 25.3 million barrels a day in February, down from 26.3 million barrels a day in January, Conrad Gerber, founder of PetroLogistics, said today. Members have a quota of 24.845 million barrels a day.
Iran, Venezuela and Iraq said last week that OPEC is prepared to cut production again when it meets on March 15. The group agreed Dec. 17 on output constraints that would reduce supplies in January by 2.2 million barrels a day from December levels. That followed pledges to remove 2 million barrels a day in the fourth quarter of last year.
Pressure on OPEC
“We are looking at oil consumption this year down by more than a million barrels a day,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. “That certainly is significant and puts pressure on OPEC to try and balance against it.”
Brent crude oil for April settlement rose as much as 94 cents, or 2.2 percent, to $42.83 a barrel on London’s ICE Futures Europe exchange and traded at $42.50, up 61 cents, at 1:49 p.m. London time.
Hedge-fund managers and other large speculators increased their net-long position in New York crude-oil futures in the week ended Feb. 17, according to U.S. Commodity Futures Trading Commission data.
Speculative long positions, or bets prices will rise, outnumbered short positions by 45,016 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions rose by 28,438 contracts, or 172 percent, from a week earlier.
