Oil Rises a Second Day Before OPEC Meets to Discuss Output Cut

By Mark Shenk

March 13 (Bloomberg) -- Crude oil rose a second day as ministers from the Organization of Petroleum Exporting Countries prepare to meet this weekend to consider a production cut.

The oil market is oversupplied and OPEC will lower output if needed, Shokri Ghanem, who chairs Libya’s state-run National Oil Corp., said yesterday. Other ministers have called for a halt to reductions. Prices also climbed as equities rose after Bank of America Corp. said that it will be profitable this year and Japan and China pledged aid for their economies.

“You are seeing a lot of last-minute positioning before the OPEC meeting,” said Peter Beutel, president of Cameron Hanover Inc., an energy consulting company in New Canaan, Connecticut. “There’s not a lot of consensus about what they will do, which is unusual before a meeting. We could come in Monday to a big surprise.”

Crude oil for April delivery rose 19 cents, or 0.4 percent, to $47.22 a barrel at 9:25 a.m. on the New York Mercantile Exchange. Prices are up 3.6 percent this week and down 5.9 percent so far this year.

OPEC has reduced daily output targets by 4.2 million barrels since September. Ministers will meet on March 15 in Vienna.

Nigeria is opposed to further oil-supply reductions by OPEC countries at this month’s meeting, a spokesman for the state oil company said yesterday. Qatari Oil Minister Abdullah bin Hamad al-Attiyah said this week that the group needs to reach full compliance before any new action.

The 11 OPEC nations bound by production quotas, all except Iraq, pumped 25.7 million barrels a day last month, an International Energy Agency report showed today. That compares with their official Jan. 1 limit of 24.845 million a day. The figure implies the group is complying with 80 percent of its production targets, the IEA said.

Demand Forecasts

The IEA cut its 2009 oil demand forecast for a seventh month, a decline that will be matched by lower non-OPEC supply. The Paris-based adviser to 28 nations lowered its consumption forecast by 270,000 barrels a day to 84.4 million barrels a day. That represents a reduction in demand of 1.25 million barrels a day, or 1.5 percent, from 2008.

OPEC also reduced its 2009 oil-demand forecast today as the global economy was in a “dreadful situation.” The group cut its estimate by 520,000 barrels a day to 84.6 million barrels a day.

Brent crude oil for April settlement increased 16 cents, or 0.4 percent, to $45.25 a barrel on London’s ICE Futures Europe exchange.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.