Oil held at about $60 on Friday, as traders weighed Opec’s plans to cut production against overflowing stockpiles in top consumer the US.
US crude rose 7 cents to $60,10 a barrel in early trade, after dipping to a low of $59,60 in early trade. London Brent rose 13 cents to $60,13.
“The market is moving on rumours that Saudi Arabia has agreed to cut production since prices have continued to fall despite the earlier news,” said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures.
Officials from the Organisation of the Petroleum Exporting Countries (OPEC) said on Thursday the group would cut output by 1 million barrels per day (bpd) as soon as possible, its first output cut in more than two years.
An Opec delegate said Saudi Arabia would lower production by 300 000 bpd as part of the plan, while Opec President Edmund Daukoru said six producers, including Saudi Arabia, had already reduced output voluntarily.
“Saudi Arabia has not said anything yet but the market is speculating that they will make a significant announcement,” Emori said.
The cutback plans by Opec, which pumps more than a third of the world’s oil, expands on marginal supply cutbacks announced last week by Nigeria and Venezuela.
Nine Opec countries will take part in the supply curbs and will cut their “fair share” from overall Opec production, a senior delegate said. Opec pumped 29,47 million bpd in September, a Reuters survey showed.
Daukoru said on Thursday that some members wanted an emergency meeting before a gathering already scheduled for December, and talks were continuing on how to stem what he called a free-fall in prices.
Oil prices have been little boosted as investors turned their attention to brimming US fuel inventories and as some traders remained sceptical in the absence of a formal Opec announcement.
“There were some knee-jerk reactions to news of Opec cutting supplies but the gain was not sustained mainly because of high US stock levels,” said Ken Hasegawa, a manager at Himiwari CX, Japan’s largest commodities futures broker.
US crude stocks rose by 3,3 million barrels last week to 328,1 million barrels, countering expectations for a drop and leaving them nearly 7% higher than a year ago, according to a government report this week.
Distillate supplies, which include heating oil, rose 200 000 barrels to the highest level since 1999.
Despite the high stock cushion, OPEC’s plan disappointed the world’s top oil consumer, which expressed concern given peak winter demand is around the corner.
US Energy Secretary Sam Bodman said he did not want Opec to cut daily output by 1 million barrels, and White House economic adviser Al Hubbard said President George Bush was not happy with oil prices near $59 a barrel.
OPEC’s official output limit has stood at 28 million bpd for more than a year. Analysts say OPEC’s plan to slash output by 1 million bpd would at best lend support to prices, but was unlikely to drive prices much higher.
“Even if Opec cuts output now, prices would very much stay at the same level,” Hasegawa said.
Violence in Nigeria remains a potentially bullish factor, given the risk of further supply disruptions. Nigerian militants accused troops of razing a village in the oil-producing Niger Delta on Thursday and threatened reprisals, although a military spokesman denied an attack had occurred.
The latest incidents this week did not affect production, though a fifth of Nigeria’s production capacity remains shut.
US crude rose 7 cents to $60,10 a barrel in early trade, after dipping to a low of $59,60 in early trade. London Brent rose 13 cents to $60,13.
“The market is moving on rumours that Saudi Arabia has agreed to cut production since prices have continued to fall despite the earlier news,” said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures.
Officials from the Organisation of the Petroleum Exporting Countries (OPEC) said on Thursday the group would cut output by 1 million barrels per day (bpd) as soon as possible, its first output cut in more than two years.
An Opec delegate said Saudi Arabia would lower production by 300 000 bpd as part of the plan, while Opec President Edmund Daukoru said six producers, including Saudi Arabia, had already reduced output voluntarily.
“Saudi Arabia has not said anything yet but the market is speculating that they will make a significant announcement,” Emori said.
The cutback plans by Opec, which pumps more than a third of the world’s oil, expands on marginal supply cutbacks announced last week by Nigeria and Venezuela.
Nine Opec countries will take part in the supply curbs and will cut their “fair share” from overall Opec production, a senior delegate said. Opec pumped 29,47 million bpd in September, a Reuters survey showed.
Daukoru said on Thursday that some members wanted an emergency meeting before a gathering already scheduled for December, and talks were continuing on how to stem what he called a free-fall in prices.
Oil prices have been little boosted as investors turned their attention to brimming US fuel inventories and as some traders remained sceptical in the absence of a formal Opec announcement.
“There were some knee-jerk reactions to news of Opec cutting supplies but the gain was not sustained mainly because of high US stock levels,” said Ken Hasegawa, a manager at Himiwari CX, Japan’s largest commodities futures broker.
US crude stocks rose by 3,3 million barrels last week to 328,1 million barrels, countering expectations for a drop and leaving them nearly 7% higher than a year ago, according to a government report this week.
Distillate supplies, which include heating oil, rose 200 000 barrels to the highest level since 1999.
Despite the high stock cushion, OPEC’s plan disappointed the world’s top oil consumer, which expressed concern given peak winter demand is around the corner.
US Energy Secretary Sam Bodman said he did not want Opec to cut daily output by 1 million barrels, and White House economic adviser Al Hubbard said President George Bush was not happy with oil prices near $59 a barrel.
OPEC’s official output limit has stood at 28 million bpd for more than a year. Analysts say OPEC’s plan to slash output by 1 million bpd would at best lend support to prices, but was unlikely to drive prices much higher.
“Even if Opec cuts output now, prices would very much stay at the same level,” Hasegawa said.
Violence in Nigeria remains a potentially bullish factor, given the risk of further supply disruptions. Nigerian militants accused troops of razing a village in the oil-producing Niger Delta on Thursday and threatened reprisals, although a military spokesman denied an attack had occurred.
The latest incidents this week did not affect production, though a fifth of Nigeria’s production capacity remains shut.
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