Oil prices rebounded above $50 a barrel, on Monday, on fresh hope that the scheduled Organisation of Petroleum Exporting Countries (OPEC) conference may see a move to cut output quotas in a direct attempt to arrest falling demand figures.
New York’s main contract: light, sweet crude for December delivery saw a near 10% jump, rising by $4.29 to $54.22.
Meanwhile inn London, the benchmark Brent crude contract also climbed by $4.31 to $53.30 a barrel.
Analysts also believe that the price spike is in part due to the influence of measures taken by Western governments beginning to play their part. A slightly more predictable, yet not to be underestimated, factor is the rise in demand for winter heating fuel in northwest Europe. The most recent governmental-level move to fight the economic collapse came in the form of the U.S. government’s rescue plan for the Citigroup bank. The moved also helped spike a worldwide rally on stocks.
Christopher Bellew, a broker at Bache Commodities, said: “The FTSE is up so that should provide support, as should the colder weather.
“All the considerable amount of bearish data may finally be priced in,” he added. The FTSE 100 index saw a gain of nearly 5% on Monday.
OPEC ministers are set to meet for an Extraordinary General Meeting (EGM) in Cairo, on November 29, for a round of informal talks, with the primary focus of course being on quota cuts.
In recent weeks noises from dissenting member nations have become increasingly louder, calling for further cuts to stem the flow of consistently falling prices – before Monday’s trading of course. Venezuela and Iran have been the most outspoken of the members thus far.
Venezuelan Energy Minister, Rafael Ramirez, has already stated that he will be seeking a further production cut of 1.0 million barrels per day (bpd) by the end of the calendar year.
Iran’s envoy to OPEC, Mohammed Ali Khatbi, said that the previous cut had failed to meet its intended impact. “So it appears that OPEC needs to further reduce production to prevent this trend,” he added.
OPEC previously agreed to reduce production by 1.5 million bpd back on October 24, but has since refrained from making further cuts as it claims to have been waiting for sufficient data on the previous round of chops to come through.
Tim Evans, energy analyst for Citi futures, said: “We continue to see evidence of an OPEC consensus for a further production cut when the cartel meets on Saturday.” However, any decision to cut that it made is unlikely to be announced until the next full policy meeting, which is scheduled for December.