Oil climbs above $US63 on OPEC cut
Posted at 6:10pm on 16 Dec 2006
Oil prices climbed above $US63 a barrel on Friday as dense fog delayed crude shipments to refineries along the US Gulf Coast a day after OPEC agreed to cut output for a second time in two months.
US crude rose 92 US cents to $US63.43 a barrel, the highest settlement in two weeks. London Brent crude was up 60c at $US63.49.
Dozens of ships have been delayed since Thursday by a thick fog blanketing the Houston Ship Channel and other parts of the Gulf Coast, cutting the region's many oil refineries off from fresh crude supplies.
Forecasts predicted the fog would linger on and off for five days and oil companies warned that a prolonged disruption to shipments could force them to reduce fuel output.
The shipping disruptions came a day after the Organization of Petroleum Exporting Countries decided to cut supply by 500,000 barrels per day, or 2%, effective February 1. That follows a cut of 1.2 million bpd agreed from November 1.
On Thursday, US crude rose more than $US1 a barrel after the decision to cut output by OPEC, which is the source of more than a third of the world's oil.
Ample inventories and mild weather across much of the United States, the world's top oil consumer, limited the rally.
Heating demand lower
Heating demand will average much below normal in the US northeast in the next five days, private forecaster DTN Meteorlogix said. The six- to 10-day forecast for the region was for temperatures to be mostly above normal, DTN said.
OPEC has continued to pump about 1m bpd above its current output target in December, Geneva-based consultant Petrologistics said on Friday.
Excluding Iraq, which is not part of OPEC deals to limit supply, OPEC output was expected to average 27.3m bpd in December, steady from November, according to Petrologistics.
Crude oil stocks in the United States, the world's top oil consumer, fell 4.3m barrels last week. They still stood at their highest level since 1998 for this time of year.
US crude oil has hovered around $US60 a barrel for the past three months as OPEC's first cut helped arrest a 25% slide from a record high of $US78.40 a barrel in July.
Also supporting prices on Friday was a fresh attack on the oil industry in Nigeria, the world's eighth-largest exporter. Gunmen invaded an oil field control station operated by Royal Dutch Shell in Nigeria's Bayelsa state and were holding several people hostage, a company spokesman said.
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