Oil ($59) Rises Slightly Before OPEC Meeting Tomorrow to Decide on Output Cuts ....(market minimally impacted)
By Hector Forster
Oct. 18 (Bloomberg) -- Crude oil rose in New York before an OPEC meeting tomorrow that will decide on a plan to lower output by 1 million barrels a day.
Members of the Organization of Petroleum Exporting Countries, which pump about 40 percent of the world's oil, meet in Qatar to try and stem a three-moth slide in prices. Oil declined for the first day in four yesterday after U.S. industrial production fell the most in a year in September, signaling weaker demand in the world's largest energy consumer.
``Prices have been rising as OPEC is saying they will cut 1 million barrels,'' said Mikikaru Amano, an analyst at futures broker Taiheiyo Bussan Co. in Tokyo. ``There are enough inventories and the supply-demand balance has weakened.''
Crude oil for November delivery rose as much as 32 cents or 0.5 percent to $59.25 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $59.12 at 11:01 a.m. in Singapore.
The contract fell $1.01, or 1.7 percent, to close at $58.93 a barrel yesterday. Prices reached a one-week high of $60.54 after Kuwait's oil minister said OPEC will agree to cut output by 1 million barrels a day.
The group will cut production by about 3.6 percent, Kuwait's Sheikh Ali-Jarrah al-Sabah said yesterday, rather than reduce quotas which some members can't meet and others ignore.
``We are shrugging off OPEC's production cuts,'' Kyle Cooper, director of research at IAF Advisors in Houston, said yesterday. ``There are healthy inventories and any cut in production will increase spare capacity.''
In London, Brent crude oil rose as much as 36 cents, or 0.6 percent, to $61.30 a barrel on the ICE Futures Exchange. It was at $61.22 a barrel at 10:48 a.m. Singapore time.
Demand Slowing
OPEC cut its oil consumption forecasts for 2006 and 2007 on Oct. 16, citing ``far from robust'' demand. Continuing daily output at September levels of 29.7 million barrels would increase stockpiles by 1 million barrels a day in the fourth- quarter when they usually decline, the group said.
Oil reached a record $78.40 on July 14, on concern global capacity was insufficient to replace lost output if Israel's attach on Hezbollah forces in Lebanon sparked a larger conflict in the Middle East, source of a third of the world's oil.
Prices have fallen 25 percent since as the conflict ended and stockpiles rose. Oil reached a 10-month low of $57.22 on Oct. 12 and has traded above $60 on only two days since.
``It's been trading somewhat side-ways for the last couple of weeks,'' said Mike Sander, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California. ``If OPEC wasn't making these statements on production it would have gone much lower.''
Inventories Rising
An Energy Department report later today will probably show the nation's above-average crude oil stockpiles rose for a third straight week, based on a Bloomberg News survey of 14 analysts.
U.S. crude oil inventories held 330.5 million barrels on Oct. 6, 14 percent higher than the five-year average.
Supplies probably gained 1.5 million barrels last week, based on the median of forecasts by 15 analysts. Refinery utilization probably fell a fourth week to a five-month low of 88.8 percent as plant operators took advantage of weak pre- winter demand to carry out maintenance.
Supplies of distillate fuel, a category that includes heating oil and diesel, probably declined 800,000 barrels from 149.9 million the prior week. Ten analysts expected a decline, three forecast a gain and two said that supplies were unchanged.
Analysts were split on whether gasoline stockpiles rose or fell last week. Supplies probably dropped 200,000 barrels from 215.4 million the week before. Eight of the analysts said inventories fell, five expected that supplies rose and two forecast no change.
The Energy Department is scheduled to release its weekly report on petroleum inventories today at 10:30 a.m. in Washington.
Industrial production in the U.S., which uses about a quarter of the world's oil, fell 0.6 percent in September after being unchanged in August, the Federal Reserve said yesterday. Economists had expected a 0.1 percent decline.
To contact the reporters on this story: Hector Forster in Tokyo at hforster@bloomberg.net .
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