Crude prices gain further after OPEC cut decision

Crude prices gain further after OPEC cut decision

London (Platts)--20Oct2006

Global crude futures in London and New York extended Thursday's gains as
reaction to the announced OPEC cuts from actual production took hold. Prices
were also supported by the comments from the Saudi oil minister for a possible
further output cut in December.
The front-month ICE December Brent futures contract was trading 26 cents
higher at $61.15 per barrel with WTI for November delivery trading 34 cents up
at $58.84 per barrel. ICE WTI for December was 33 cents higher at $60.83 per
barrel.
The comments by Saudi Arabia almost implied that the recent cuts are not
enough hence the December statement," said a Bache Financial broker. Late last
night, OPEC confirmed that the cartel would cut by 1.2 million barrels per day
from the actual September volumes.
Despite the recent price increase, brokers said that prices remained on a
downward trend with supply outstripping demand in both crude oil and products.
"The market needs constant injections from bullish news to keep prices going
up," one broker noted. Many of the hedge funds, which had helped to drive
prices higher earlier in the year, were running short positions. "They are not
showing much incentive to cover their shorts," Bache Finacial said.
From the OPEC announcement Friday, Saudi Arabia said it would cut 380,000
b/d, Iran 176,000 b/d and Venezuela 138,000 b/d. The remaining details of the
cut are as follows.
Following is a breakdown of the 1.2 million b/d cut, as provided by OPEC:
Country Cut from November 1 (b/d)
Algeria 59,000
Indonesia 39,000
Iran 176,000
Kuwait 100,000
Libya 72,000
Nigeria 100,000
Qatar 35,000
Saudi Arabia 380,000
UAE 101,000
Venezuela 138,000
Total 1,200,000
Paul Wightman, paul_wightman@platts.com

Please visit: www.platts.com

Their coverage of energy matters is extensive!!.