By Gavin Evans
Dec. 22 (Bloomberg) -- Crude oil rose in New York on speculation OPEC’s production cuts next month and U.S. economic stimulus plans will reduce global stockpiles.
The Organization of Petroleum Exporting Countries is “determined” to stabilize oil markets, Saudi Oil Minister Ali al-Naimi said in Doha, Qatar, yesterday. U.S. President-elect Barack Obama is broadening a package of measures to create 3 million jobs in the U.S., the world’s largest economy, during the next two years, an aide said Dec. 20.
Oil “is demand and supply driven,” Jonathan Barratt, managing director of Commodity Broking Services in Sydney, said in a Bloomberg Television interview. “As we have more cuts we will see prices stabilize and then move higher.”
Crude oil for February delivery gained as much as 78 cents, or 1.8 percent, to $43.14 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $43.18 at 8:51 a.m. in Singapore.
The January contract, which expired last week, plunged 6.5 percent to $33.87 a barrel on Dec. 19, the lowest settlement since Feb. 10, 2004. It dropped 27 percent last week as stockpiles at Cushing, Oklahoma, jumped to a 19-month high and investors quit the contract before the holiday break.
OPEC and other producers are “desperate to get dollars and they are desperate to get the prices higher,” Commodity Broking’s Barratt said.
Price Plunge
New York oil futures have fallen 71 percent from the record $147.27 a barrel reached on July 11.
Brent crude oil for February settlement rose as much as 65 cents, or 1.5 percent, to $44.65 a barrel on London’s ICE Futures Europe exchange. It rose 1.5 percent to $44 on Dec. 19.
OPEC, which pumps about 40 percent of the world’s oil, agreed this month to cut daily output by 2.46 million barrels starting Jan. 1 to hold up prices and prevent a glut developing in the second quarter of next year.
The group had reduced output by 1.5 million barrels in November and won’t meet again before March to assess the impact of the latest reduction, Qatar’s Oil Minister Abdullah bin Hamad al-Attiyah said in Doha yesterday.
Russia, the biggest producer outside OPEC, cut production by 350,000 barrels a day last month, and may reduce supply by a further 320,000 barrels next year, Deputy Prime Minister Igor Sechin said Dec. 17.
Hedge-fund managers and other large speculators last week increased bets on rising oil prices to the most in seven months, the U.S. Commodity Futures Trading Commission said Dec. 19.
Net-long positions, the difference between orders to buy and sell the commodity, increased more than fivefold to 64,120 contracts on Dec. 16, the commission said.
To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net
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