Crude prices gain further after OPEC cut decision
October 20, 2006
Global crude futures in London and New York extended Thursday's gains asreaction to the announced OPEC cuts from actual production took hold. Priceswere also supported by the comments from the Saudi oil minister for a possiblefurther output cut in December.
The front-month ICE December Brent futures contract was trading 26 centshigher at $61.15 per barrel with WTI for November delivery trading 34 cents upat $58.84 per barrel. ICE WTI for December was 33 cents higher at $60.83 perbarrel.
The comments by Saudi Arabia almost implied that the recent cuts are notenough hence the December statement," said a Bache Financial broker. Late lastnight, OPEC confirmed that the cartel would cut by 1.2 million barrels per dayfrom the actual September volumes.
Despite the recent price increase, brokers said that prices remained on adownward trend with supply outstripping demand in both crude oil and products."The market needs constant injections from bullish news to keep prices goingup," one broker noted. Many of the hedge funds, which had helped to driveprices higher earlier in the year, were running short positions. "They are notshowing much incentive to cover their shorts," Bache Finacial said.
From the OPEC announcement Friday, Saudi Arabia said it would cut 380,000b/d, Iran 176,000 b/d and Venezuela 138,000 b/d. The remaining details of thecut are as follows.
Following is a breakdown of the 1.2 million b/d cut, as provided by OPEC:
|| Cut from November 1 (b/d)|