Crude Oil Rises

Crude oil rose on speculation that reduced OPEC production in January will curb global inventories and bolster prices., Bloomberg 2/3/2009 12:18:48 PM

OPEC output averaged 28.57 million barrels a day last month, down 3.5 percent from December, according to a Bloomberg News survey of oil companies, producers and analysts. The United Arab Emirates and Qatar plan to extend reductions in crude-oil shipments in March, according to refiners.

Crude oil for March delivery rose 81 cents, or 2 percent, to $40.89 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $39.65, the lowest since Jan. 20. Prices are down 8.3 percent this year and are 55 percent lower than a year ago.

The Organization of Petroleum Exporting Countries, responsible for more than 40 percent of global oil supply, agreed on Dec. 17 in Oran, Algeria, to lower production as oil prices headed for their first annual decline since 2001.

OPEC members with output quotas, all except Iraq, pumped 26.2 million barrels a day, 1.36 million more than their target of 24.85 million barrels a day.

Saudi Arabia, OPEC’s biggest producer and the world’s top oil exporter, cut output by 375,000 barrels a day last month to an average 8.025 million barrels a day, the lowest since December 2002. Production was 26,000 barrels a day lower than its target of 8.051 million barrels a day, the Bloomberg survey showed.

The U.A.E. and Qatar plan to reduce their crude oil shipments to Asia in March in line with OPEC cuts, said refiners who received notices from suppliers.

State-owned Qatar Petroleum will slash supplies of its Marine grade sold under long-term contracts by 15 percent, following a 6 percent cut in February, said the refinery officials in Singapore, China, Japan and South Korea, who asked not to be named, citing confidentiality agreements.

Abu Dhabi National Oil Co., the Emirates’ state-owned producer, will cut supplies of Murban oil by 10 percent after a 15 percent reduction in February, said the officials. Shipments of Upper Zakum grade will be reduced by 15 percent, Umm Shaif by 10 percent and Lower Zakum by 10 percent, similar to cuts in volume last month.

U.S. crude-oil stockpiles increased 3 million barrels last week, according to the median of 13 analyst estimates in a Bloomberg News survey. The Energy Department is scheduled to release its weekly petroleum supply report tomorrow at 10:30 a.m. in Washington.

The price of oil for delivery next January is 32 percent more than for the current month, increasing the opportunity for traders to profit from storing crude for later use. This structure, in which a future month’s price is higher than the one before it, is known as contango.

Falling prices and lower fuel demand have hurt energy company earnings. BP Plc, Europe’s second-biggest oil company, posted its first quarterly loss in seven years today. The fourth- quarter decline was $3.3 billion, or 18 cents a share, compared with net income of $4.4 billion, or 23 cents, a year earlier, London-based BP said today in a statement.

Brent crude oil for March settlement increased 34 cents, or 0.8 percent, to $44.16 a barrel on London’s ICE Futures Europe exchange.