Oil Rises $2 on Signs OPEC Will Cut Production

Crude oil advanced $2 a barrel in New York on signs that OPEC will announce a production cut at a meeting next week.

The Organization of Petroleum Exporting Countries, which supplies more than 40 percent of the world's oil, brought forward to next week a November meeting to discuss output levels. Oil has tumbled more than 50 percent since reaching a record $147.27 in July because the financial crisis threatens to push the world into a recession, curbing fuel demand.

Crude oil for November delivery rose $2, or 2.9 percent, to settle at $71.85 a barrel at 2:49 p.m. on the New York Mercantile Exchange. Prices, which dropped 7.5 percent this week, are down 18 percent from a year ago.

OPEC will likely reduce oil output by 1 million barrels a day at next week's meeting to check the drop in prices, Qatari Oil Minister Abdullah al-Attiyah said.

OPEC oil supplies fell 3.8 percent in September to 31.8 million barrels a day, according to data from Geneva-based consultants PetroLogistics Ltd. The amount declined from 33.05 million barrels in August because of lower sales by Saudi Arabia and Iran, Conrad Gerber, the company founder, said yesterday.

OPEC reduced its forecast for average oil demand next year by 450,000 barrels a day, or 0.5 percent, to 87.21 million barrels a day, in a report Oct. 15. The International Energy Agency and U.S. Energy Department cut their forecasts earlier this month.

Fuel demand in the U.S., consumer of 24 percent of the world's oil, was at the lowest since July 1999 during the past four weeks, according to a weekly supply report from the Energy Department. Demand averaged about 18.6 million barrels a day, according to yesterday's report.

Brent crude oil for December settlement rose $1.76, or 2.6 percent, to settle at $69.60 a barrel on London's ICE Futures Europe exchange.

Gold fell in New York, ending its worst week in two months, as a report showed single-family home construction sank to the slowest pace in 26 years, easing inflation concerns as the economy cools. Silver also slid.

Gold futures for December delivery dropped $16.80, or 2.1 percent, to $787.70 an ounce on the Comex division of the New York Mercantile Exchange. The price slid 8.3 percent from last week, the biggest such decline for a most-active contract since Aug. 15.

TradingEconomics.com, Bloomberg
10/17/2008 1:30:21 PM