Oil rises above USD 43 as investors await OPEC cut

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

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

The Organisation of Petroleum Exporting Countries, which accounts for about 40 per cent of global crude supply, has signalled 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.