Oil Rises

Crude oil rose from a 17-month low as stocks in Europe and Asia rebounded and OPEC ministers said the group may meet again before December, raising speculation of deeper cuts in production.

Crude rose, tracking equities, as the MSCI World Index added 1.4 percent to 846.06 in London, snapping a two-day drop. OPEC Secretary-General Abdalla el-Badri said the producer group may call a meeting earlier than a scheduled December date if prices fail to react to the 1.5 million-barrel-a-day production cut announced by the group last week.

Crude oil for December delivery climbed as much as $1.67, or 2.6 percent, to $64.89 a barrel on the New York Mercantile Exchange after falling as low as $61.75 earlier today. It was at $64.10 a barrel at 9:09 a.m. London time.

OPEC's decision last week to trim production for the first time in almost two years failed to stop prices falling yesterday to the lowest settlement price since May 29, 2007. Crude has fallen 56 percent since reaching a record $147.27 on July 11 and is down 32 percent from a year ago.

``If circumstances dictate we have another meeting; of course we will meet,'' el-Badri said today at the Oil & Money conference in London. He said he expects a market response to last week's production cut after about a week.

Shokri Ghanem, chairman of Libya's National Oil Corp., echoed el-Badri's comments, and said he's watching the market to see whether it's ``deteriorating or stabilizing.''

Oil was also supported by potential disruptions in supply to the U.S. from Mexico. Petroleos Mexicanos, the third-largest supplier of crude to the U.S., closed two of its oil export terminals in the Gulf of Mexico because of heavy rains and wind.

The terminals at the ports of Pajaritos and Dos Bocas shut at 4 p.m. yesterday, according to a weather bulletin on the Web site of Mexico's Merchant Marine.

Brent crude oil for December settlement gained as much as $1.48, or 2.4 percent, to $62.89 a barrel on London's ICE Futures Europe exchange. It earlier fell as much as $1.31, or 2.1 percent, to $60.10 a barrel. The contract was at $61.60 a barrel at 9:16 a.m. local time.

Oil is heading for a 38 percent drop this month, the steepest since at least 1986 in New York, even after the output cut announced by the Organization of Petroleum Exporting Countries at an emergency meeting in Vienna last week.

The U.S. Energy Department will probably report tomorrow that U.S. supplies of crude oil, gasoline and distillate fuel, a category that includes heating oil and diesel, rose last week, a Bloomberg News survey showed.

TradingEconomics.com, Bloomberg.com
10/28/2008 2:57:26 AM