Oil Gains as OPEC May Cut Production Further, Asian Stocks Rise

By Christian Schmollinger

Feb. 4 (Bloomberg) -- Crude oil rose for a second day in New York after OPEC’s president said the group may reduce output further to trim stockpiles and Asian equities extended gains.

Angolan Oil Minister Jose Maria Botelho de Vasconcelos, the producer group’s current president, said “new measures” may be taken at OPEC’s March 15 meeting in Vienna if the current round of cuts don’t raise prices. OPEC reduced 1.05 million barrels a day of production last month, according to a survey of producers, oil companies and analysts.

“Most indications are that OPEC is moving to a high rate of compliance” with lower output quotas, said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. “There is certainly the possibility of another cut. OPEC realizes that oil consumption has weakened and they are trying to balance supply against that as a way to support the price.”

Crude oil for March delivery rose as much as 35 cents, or 0.9 percent, to $41.13 a barrel in electronic trading on the New York Mercantile Exchange. It was at $41.06 a barrel at 10:38 a.m. Singapore time. Yesterday, futures advanced 70 cents, or 1.8 percent, to settle at $40.78. Prices are down 8 percent this year and 54 percent from a year ago.

The Organization of Petroleum Exporting Countries, responsible for more than 40 percent of global oil supply, agreed on Dec. 17 in Oran, Algeria, to lower production as oil prices headed for their first annual decline since 2001.

OPEC members with output quotas, all except Iraq, pumped 26.2 million barrels a day, 1.36 million more than their target of 24.85 million barrels a day, according to data compiled by Bloomberg.

‘50-50 Chance’

For Angola, an oil price of $75 a barrel “would already be very good,” Botelho de Vasconcelos said yesterday, according to Portuguese news agency Lusa. There is a “50-50 probability” that OPEC will trim quotas at its March 15 meeting, Algerian Oil Minister Chakib Khelil said yesterday.

Asian stocks rose for a second day as the region’s automakers strengthened their market share in the U.S. and memory-chip prices advanced. The MSCI Asia Pacific Index rose 0.8 percent to 82.60 as of 10:47 a.m. in Tokyo. Mitsui O.S.K. Lines Ltd. paced gains among shipping lines as transport rates climbed for an 11th day.

Futures on the Standard & Poor’s 500 Index added 0.3 percent. The gauge added 1.6 percent yesterday as Treasury Secretary Timothy Geithner said the government will step up efforts to fight the recession.

U.S. Stockpiles

Governments around the world are boosting efforts to revive the global economy. The number of Americans signing contracts to buy previously owned homes rose in December for the first time since August, an industry report showed.

U.S. crude-oil stockpiles increased 3 million barrels last week, according to the median of 13 analyst estimates in a Bloomberg News survey. The Energy Department is scheduled to release its weekly petroleum supply report at 10:30 a.m. today in Washington.

The industry-funded American Petroleum Institute reported that U.S. supplies rose 8.13 million barrels to 346.2 million last week. The API published its weekly report on oil inventories at 4:30 p.m. in Washington yesterday.

The API moved the release of its inventory data to Tuesday afternoons beginning last week. It had been issuing its reports on Wednesday mornings since 2003 to coincide with supply totals released by the government.

The price of oil for delivery next January is 31 percent more than for the current month, increasing the opportunity for traders to profit from storing crude for later use. This structure, in which a future month’s price is higher than the one before it, is known as contango.

Brent crude oil for March settlement was at $44.39 a barrel, up 31 cents, on London’s ICE Futures Europe exchange at 10:23 a.m. Singapore time. The contract gained 26 cents, or 0.6 percent, yesterday to end the session at $44.08 a barrel.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.