Oil rises above $43 as investors await OPEC cut

SINGAPORE: Oil prices rose above $43 a barrel Wednesday in Asia as investors looked to an expected OPEC production cut next week to help stabilize prices that have plummeted amid a global economic slowdown.

Light, sweet crude for January delivery was up $1.21 to $43.28 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract fell overnight $1.64 to settle at $42.07.

The Organization of Petroleum Exporting Countries, which accounts for about 40 percent of global crude supply, has signaled it plans to reduce output quotas at a meeting December 17 in Algeria.

Investors expect OPEC to slash production by at least 1.5 million barrels a day, matching the group's cut in October.

``The expectation of an OPEC cut is going some way toward curbing the downward momentum in prices,'' said Toby Hassall, an analyst at investment firm Commodity Warrants Australia in Sydney. ``A cut of 1.5 million to 2 million barrels a day seems like a reasonable range.''

Investors will be watching for more signs of slowing US demand in the weekly oil inventories report to be released Wednesday by the US Energy Department's Energy Information Administration.

The report is expected to show that oil stocks rose 2.7 million barrels last week, according to the average of estimates in a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.

The Platts survey also projects that gasoline inventories rose 1.4 million barrels and distillates fell 1.6 million barrels last week.

``The fact that we've seen quite a large build in inventories in the last couple months is a symptom of the weak demand environment in the US,'' Hassall said. Prices have fallen about 70 percent since peaking at $147.27 in July.

``We're probably in the early stages of forming a base at the moment, and the price will likely edge up toward $60 or $70 by the middle of next year,'' Hassall said. ``We probably overshot on the downside the same way we overshot to the upside earlier this year.''

In other Nymex trading, gasoline futures rose 1.51 cents to 95 cents. Heating oil gained 1.21 cents to $1.45 a gallon while natural gas for January delivery jumped 6.1 cents to 5.64 per 1,000 cubic feet. In London, January Brent crude rose 98 cents to $42.51 on the ICE Futures exchange.