February production will be lower than the target” agreed to at an OPEC meeting, Saudi Oil Minister Ali al-Naimi said as he arrived for a conference in New Delhi today. The country is currently producing 8 million barrels a day, about level with an 8.051 million barrel-a-day allocation established on Dec. 17.
Crude oil for February delivery rose 27 cents, or 0.7 percent, to $37.86 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Oil is down 59 percent from a year ago.
Oil ministers from the Organization of Petroleum Exporting Countries agreed on Dec. 17 in Oran, Algeria, to cut supply by 9 percent starting Jan. 1 to 24.845 million barrels a day.
The group needs to make the deepest supply reductions in its history to comply with the new target. The 11 OPEC nations with quotas produced an average of 27.45 million barrels a day in December, according to Bloomberg estimates.
The U.S. economy will contract 1.5 percent this year, a half percentage point more than projected last month, according to the median of 59 forecasts in a survey taken from Jan. 5 to Jan. 12 by Bloomberg News.
Brent crude oil for February settlement rose $2.18, or 5.1 percent, to $45.09 a barrel on London’s ICE Futures Europe exchange.
U.S. crude stockpiles probably gained 2.75 million barrels in the week ended Jan. 9, according to the median of 14 responses by analysts in a Bloomberg News survey. The department will release its weekly petroleum supply report tomorrow.
Inventories of gasoline and distillate fuel, a category that includes heating oil and diesel, rose, according to the Bloomberg News survey.
Gasoline futures for February delivery increased 6.55 cents, or 6 percent, to $1.1496 a gallon in New York. Heating oil for February gained 4.71 cents, or 3.2 percent, to $1.5195 a gallon.