Markets wake up to Opec cut plans

MUMBAI: Crude oil for January delivery was trading on MCX at Rs 2,554 per barrel at 8 pm on Monday, marginally higher from Saturday’s close of Rs 2,495, with New York opening higher over reports that the world’s largest oil exporter, Saudi Arabia, will fully implement production cuts agreed to at the previous meetings of the Organisation of Petroleum Exporting Countries (Opec).

Crude futures fell96 cents, or 1.7% at $55.4 a barrel in afternoon trading on Nymex, having traded from $55.1 to $57.7. This came after a week-long slump in the US, following a lower heating oil demand after a relatively warm spell in the north-east of US. February By afternoon, Brent February crude on London’s ICE Futures exchange tumbled to an interday low of $54.5 a barrel the lowest since November 2005.

Opec’s cut would amount to 1,58,000 barrels per day starting in February, in addition to a reduction of 3,80,000 barrels per day agreed to in November. News that Belarus has halted Russian oil supplies to Poland, Germany and Ukraine as part of a trade row with Russia also supported energy futures. The fresh OPEC talk is expected to keep oil on the higher side.

The previous week saw crude prices witnessing the biggest single-week drop since April last year to as low as $54.90 per barrel. Meanwhile, natural gas prices rose marginally to $6.184 per 1,000 cubic feet.