Crude Oil Rises

Oil rose on speculation that OPEC production cuts are starting to reduce the oversupply of crude caused by weakening demand., Bloomberg 2/11/2009 5:30:53 AM

The industry-funded American Petroleum Institute yesterday said U.S. crude supplies unexpectedly declined 2 million barrels to 344.3 million last week. OPEC’s secretary general said this week the group has complied with about 80 percent of production cuts announced through to December. An Energy Department report today is expected to show the smallest increase in stocks in four weeks, a Bloomberg survey showed.

Crude oil for March delivery rose as much as 89 cents, or 2.4 percent, to $38.44 a barrel on the New York Mercantile Exchange. It was at $37.76 a barrel at 12:52 p.m. London time.

Yesterday, crude oil fell $2.01 to $37.55 a barrel in New York, the biggest drop since Jan. 27. Oil is down 15 percent this year and has declined 60 percent from a year ago.

The Organization of Petroleum Exporting Countries pumped 29 million barrels a day of crude in January, 950,000 barrels a day less than in December, as the cartel implemented announced supply cuts, the International Energy Agency said in its monthly report today. Saudi Arabia, OPEC’s biggest producer, cut by 300,000 barrels last month to 8.1 million barrels a day, the IEA said.

OPEC has complied with about 80 percent of its 4.2 million barrels a day in production cuts and has 900,000 barrels left, Secretary-General Abdalla el-Badri said this week. That has left the group with about 8 million barrels of shut-in capacity.

The IEA cut its global oil demand forecast for 2009, projecting consumption will decline by 1 million barrels a day as the worldwide recession deepens, the biggest drop since 1982.

The adviser to 28 nations trimmed its 2009 forecast by 570,000 barrels to 84.7 million a day because of a weaker economic outlook from the International Monetary Fund. The agency warned slipping investment in capacity may cause a price rebound that could again destabilize the global economy.”

The API published its weekly report on oil inventories at 4:30 p.m. in Washington yesterday. An Energy Department report today is expected to show an increase of 2.75 million barrels, according to a Bloomberg survey.

Energy Department figures, to be released at 10:30 a.m. in Washington today, may show that crude-oil stockpiles increased 2.75 million barrels in the week ended Feb. 6 from 346.1 million the week before, according to the median of 14 analyst estimates. It would be the 18th gain in 20 weeks. All of the analysts said supplies rose.

Brent crude oil for March settlement climbed as much as 94 cents, or 2.1 percent, to $45.55 a barrel on London’s ICE Futures Europe exchange. It was at $44.75 at 12:52 p.m. London time.