SINGAPORE – Oil prices rebounded from a 16-month low to rise above $67 yesterday in Asia on expectations OPEC will move to shore up plummeting prices with an output quota cut.
Light, sweet crude for December delivery rose $1.07 to $67.82 a barrel in electronic trading on the New York Mercantile Exchange by mid-afternoon in Singapore.
The contract Wednesday fell $5.43 to settle at $66.75 a barrel, the lowest close for a front-month contract since June 13, 2007.
Investors are eyeing an emergency meeting today in Vienna of the Organization of Petroleum Exporting Countries (OPEC), where members have said that they would like prices to fluctuate between $70 and $90 a barrel.
“$70 seems to be OPEC’s floor price so when it breaks through there, it’s probably a good time to buy for some investors,” said Gerard Rigby, an energy analyst with Fuel First Consulting in Sydney.
Chakib Khelil, Algeria’s oil minister and OPEC’s current president, said he expected a “significant” production cut since global supply outpaces demand by about two million barrels a day.
“If they only cut one million barrels, the market probably won’t react much to it,” Rigby said. “Anything around 1.5 million to two million and you’ll likely see a short-term bounce in price.”
Investors have been preoccupied this week by signs that turmoil in global financial markets may be triggering a severe economic slowdown that will undermine crude demand.
The Energy Information Administration said Wednesday crude inventories jumped by 3.2 million barrels last week, above the 2.9-million barrel increase expected by analysts surveyed by energy information provider Platts. Gasoline inventories rose by 2.7 million barrels last week, and inventories of distillates, which include heating oil and diesel, rose by 2.2 million barrels.
Over the last four weeks, the EIA said, motor gasoline demand was down 4.3 percent from the same period last year. Distillate fuel demand was down 5.8 percent, and jet fuel demand was down 9.2 percent.
“It’s the demand numbers that are the most worrisome to the market,” Rigby said. “People are just bearish, thinking we’re all heading for a global recession.”
In other Nymex trading, heating oil futures rose 1.44 cents to $2.05 a gallon, while gasoline prices gained 0.41 cents to $1.58 a gallon. Natural gas for November delivery fell 3.8 cents to $6.74 per 1,000 cubic feet.
In London, November Brent crude was up 47 cents to $64.99 a barrel on the ICE Futures exchange. – AP