LONDON: The price of New York crude oil soared above $50 per barrel to a two-week high point on Monday, as the market was driven by expectations that OPEC will cut crude output this week, traders said.
Light sweet crude for delivery in January delivery jumped to $50.05 per barrel, hitting the highest level since Dec. 1 on the New York Mercantile Exchange (NYMEX).
On London s InterContinental Exchange (ICE), Brent North Sea crude for January leapt as high as $49.96 a barrel, which was also a two-week pinnacle.
Crude prices pushed higher on hopes of hefty supply cuts by OPEC, said Nimit Khamar, analyst at the Sucden brokerage in London.
Despite the bumper gains, prices have shed about two-thirds in value since striking record highs above $147 five months ago.
The Organization of Petroleum Exporting Countries (OPEC) meets in Oran, Algeria, on Wednesday and is widely forecast to slash output in the hope of lifting prices weighed down by mounting global recession worries.
OPEC Secretary General Abdalla Salem El-Badri told reporters on his arrival in Oran on Monday that he would like to see a very sizeable cut in crude oil production, adding that the market is oversupplied with oil.
Prices later pulled back slightly, with New York crude at $49.29, up $3.01 from Friday s close. Brent oil was $2.84 higher at $49.25 a barrel.
The market was also lifted by hopes that the White House could come to the rescue of the struggling US auto sector, dealers said.
Victor Shum, analyst with energy consultancy Purvin and Gertz, said prices were bouncing back up because there are expectations that the US automakers may get rescued after all, this time by the White House.
He added: There are also expectations that OPEC will make a substantial cut later this week when they meet.
So these two factors have help reduced the worries about the (weak) global economy slowing down demand for oil.
El-Badri s remarks underpinned speculation that OPEC ministers would take action to boost prices, which have plunged by as much as 70 percent since reaching all-time highs of above $147 a barrel in July.
Everybody is supporting a cut … I don t have any doubt about it, OPEC President Chakib Khelil added on Monday.
Khelil, who is also Algeria s energy minister, added that a price of $75 a barrel would be good for producers and consumers.
We are very pessimistic about demand, he added.
The International Energy Agency (IEA) on Thursday said it expected global oil demand to fall this year for the first time since 1983.
Stocks are very high, Badri said on Monday.
We have about 100 million barrels oversupply and we have to take it out of the market. And the situation is very difficult. We have to take action at this time, added the secretary general.
Analysts are forecasting a cut of between one million and two million barrels from OPEC s official daily output quota of 27.3 million barrels, excluding Iraq. -AFP
