Oil prices rebound on eve of OPEC meet

AFP - 16 minutes ago

LONDON (AFP) - Oil prices rallied Monday on expectations that the Organization of Petroleum Exporting Countries would begin cutting crude output as prices trade close to the 100 dollar-a-barrel mark, traders said.

They rebounded from five-month lows also on worries that Hurricane Ike would threaten production facilities in the US Gulf Coast, they added.

New York's main contract, light sweet crude for delivery in October, rose 1.41 dollars to 107.64 dollars a barrel in electronic deals.

Brent North Sea crude for October climbed 1.20 dollars to 105.29 dollars.

Ahead of OPEC's policy meeting in Vienna on Tuesday, Iran led calls for the cartel to slash output.

Oil prices have plummeted from their highs of 147 dollars a barrel in July, with the OPEC meeting seen as a test of what price level the cartel wants to defend.

Most analysts surveyed by AFP expected the 13-nation group to agree to trim its output informally at its meeting before waiting until later, possibly at a scheduled gathering in December, to alter its official output target.

The trimming would be achieved by members, mainly powerhouse Saudi Arabia, agreeing to cut their excess production above their OPEC quota, which would remove oil from the market but not amount to a formal change in policy.

"Of course there is an oversupply," Iranian Oil Minister Gholam Hossein Nozari said Monday as he arrived in the Austrian capital, underlining Tehran's desire to see the organisation enforce its quota system.

At present, OPEC is believed to be producing about one million barrels more than its quota of 29.67 million barrels per day (bpd), with Saudi Arabia accounting for most of the excess. OPEC produces about 40 percent of world oil.

Oil prices had last week tumbled by about 10 percent to five-month lows close to 104 dollars as Hurricane Gustav spared damage to US refineries and platforms in the Gulf of Mexico.

They had also been weighed down by a strong US currency, which makes dollar-priced commodities more expensive for buyers holding weaker currencies, dampening demand for the raw materials, which is already falling because of a global economic slowdown.

Oil prices had broken through 100 dollars a barrel for the first time at the start of January on geo-political concerns, notably surrounding the ongoing nuclear dispute between the West and OPEC member Iran.

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