Oil Gains as Drop Deemed Excessive

Crude oil rose for the first time in five days as some traders deemed yesterday's 6.5 percent decline excessive and because of speculation OPEC may announce output cuts at its December meeting as demand slows.

Oil rebounded from an eight-month low after U.S. stocks recovered from their worst levels yesterday on speculation the Federal Reserve will cut interest rates. OPEC, supplier of about 40 percent of the world's oil, will take ``appropriate measures'' to stabilize international markets, Chakib Khelil, the group's president, said yesterday

Crude oil for November delivery jumped as much as $2.94, or 3.4 percent, to $90.75 a barrel in electronic trading, and was at $90.22 at 1:56 p.m. Singapore time on the New York Mercantile Exchange. Crude oil futures have declined 39 percent from the record $147.27 reached July 11.

Yesterday, crude futures fell $6.07 to settle at $87.81 a barrel in New York. The contract touched $87.56, the lowest since Feb. 7, as the dollar rose against the euro, while OPEC chief Khelil said the price slide will continue next year.

Petroleos Mexicanos, the third-largest supplier of crude to the U.S., closed six wells in the Gulf of Mexico and removed 33 workers from offshore platforms as Tropical Storm Marco passed nearby. Output from the producer's Lankahuasa platform was shut at 3 p.m. yesterday, Mexico City-based Pemex, as the company is known, said on its Web site. The El Raudal natural gas processing center was also shut, it said.

New York oil prices declined 12 percent last week as reports showed U.S. fuel demand the previous four weeks was the lowest in almost seven years.

Brent crude oil for November settlement gained as much as $2.17, or 2.6 percent, to $85.85 a barrel on London's ICE Futures Europe exchange. It was at $85.45 at 1:57 p.m. Singapore time. Yesterday, the contract fell $6.57, or 7.3 percent, to $83.68 a barrel on yesterday, the lowest closing price since Oct. 23, 2007.

Oil production by the Organization of Petroleum Exporting Countries, which pumps 40 percent of the world's crude, fell 1.3 percent in September as output in Iraq dropped to a 13-month low, a Bloomberg News survey released Oct. 3 showed.

OPEC members pumped an average 32.19 million barrels a day last month, down 425,000 barrels a day from August, according to the survey of oil companies, producers and analysts. August output was revised up by 40,000 barrels a day because of higher Nigerian output.

Production by the 12 members with quotas, all except Iraq, declined 250,000 barrels to 30.055 million barrels a day, 382,000 barrels higher than OPEC's target. Output fell as oil prices declined 8.3 percent during September.

advanced for a second day in London, buoyed by demand for the metal as a haven as equities continued to slide. Platinum also rose. Gold for immediate delivery rose $23.74, or 2.8 percent, to $883.49 an ounce in London as of 9:39 a.m. in London. Futures for December rose $16.50, or 1.9 percent, to $882.70 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

TradingEconomics.com, Bloomberg.com
10/7/2008 5:43:13 AM