Futures hit $44 as Opec cuts bite
News wires
Oil rose to above $44 a barrel today, supported by reports of supply cuts by Opec producers but traders remain wary ahead of US data expected to show a build in crude inventories.
US crude oil stocks are expected to have risen by 1.4 million barrels and gasoline by 1.9 million barrels in weekly data due for release later today.
Traders were looking for news of the oil storage levels at the Cushing, Oklahoma, delivery point for Nymex crude, which have been a drag on the nearby contract for US crude futures.
U.S. light crude for March delivery rose $1.16 to a high of $44.71 by 0915 GMT. On Wednesday the contract jumped $2.71 to its highest closing price since 6 January.
London Brent crude was up 95 cents at $45.97 a barrel.
The oil market is paying close attention to crude supplied by Opec members after the group pledged to cut output in an attempt to bolster global markets.
Opec is fully enforcing its deepest-ever oil supply curbs and this should be enough to boost prices, Opec president and Angolan Oil Minister Botelho de Vasconcelos told Reuters.
But some analysts said the group's 4.2 million barrels per day cuts since September might not be enough to turn the tide on a market that has plunged from a record high above $147 a barrel in July, as the global economic crisis hits consumption.
"They have to cut 4 million bpd to 5 million bpd in quotas; they have to get a good portion of that in real, wet barrels off the market," Adam Sieminski, chief energy economist for Deutsche Bank, told Reuters.
Some hopes for economic recovery were raised as US President Barack Obama summoned on his first full day in office his economic advisers, who are working with the Democratic-led Congress on an $825 billion fiscal stimulus package.
But closer to the consumer front, the government said US motorists drove 5.3% fewer miles in November than they did a year ago, a record decline for the month, as lower pump prices failed to offset the flagging economy.
Further indications of the ailing state of demand came from the world's second biggest oil consumer, with China reporting growth of just 6.8% in the fourth quarter, just shy of market expectations for 7.0%. For the whole of 2008, the economy expanded by 9%, the slowest rate in seven years.
While crude imports in December rose 11.6%, refinery production rates fell 7.4% from a year earlier, the biggest such drop in seven-and-a-half years, pushing apparent oil demand 5.5% lower versus a year ago.
The International Monetary Fund is set to sharply cut growth forecasts this month, managing director Dominique Strauss-Kahn said yesterday.
A Reuters poll yesterday showed industry analysts expected global oil demand to contract by 430,000 bpd in 2009, deeper than they had forecast previously, as the economic crisis spreads to the developing world.
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Thursday, 22 January, 2009, 07:43 GMT | last updated: Thursday, 22 January, 2009, 09:48 GMT