Oil: Opec looking to take action

Oil jumped 3 per cent to nearly US$63 a barrel on Wednesday as expectations that producing cartel Opec may slash output to defend prices countered rising US inventories.

US crude CLc1 settled US$1.95 higher at US$62.96 a barrel, surging back from a low of US$60.10 hit after data showing large builds in US petrol and distillates stocks.

London Brent LCOc1 gained US$2.09 to US$62.21 a barrel.

Oil in New York has fallen from a peak of US$78.40 in July because of rising US fuel stocks, easing economic growth and diminishing political tensions over Iran's nuclear stand-off -- the steepest drop since the 1991 Gulf War.

But US crude has had trouble making a significant breach below US$60 a barrel, despite growing supplies, and analysts say a cold northern winter, or a move by Opec to support prices by trimming output, could send oil prices back up.

"The market is looking to stabilize at the US$60-US$61 level, with US$60 being psychological, and as traders anticipate that is the price that Opec will defend," said Amanda Kurzendoerfer, commodities analyst at Summit Energy in Louisville, Kentucky.

Some analysts said, however, the glut in US inventories, along with a forecast for a warmer-than-usual winter, could push oil below US$60 in the next two months.

US petrol inventories rose by 6.3 million barrels last week, much more than expected, a government report said, while crude imports hit the third-highest level ever. EIA/S

Stocks of distillates increased by a bigger-than-forecast 2.6 million barrels, with the biggest rise coming from heating oil as companies beef up stocks ahead of the US winter.

"It looks like the market is just sold enough, and we're trying to install a bottom," said Mike Fitzpatrick, vice president for energy risk management at Fimat USA.

"Sellers are getting nervous about the market being oversold and prices start to look like bargains. And the possibility of Opec taking some action on production also is out there."

Edmund Daukoru, president of the Organisation of the Petroleum Exporting Countries, told Reuters on Tuesday "something needs to be done to steady the price."

But Opec has no plans to call an emergency meeting on supply cuts, an Opec official said Wednesday, amid signs some of the group's biggest producers were at ease over oil's price decline.

Kuwaiti Oil Minister Sheikh Ali al-Jarrah al-Sabah said on Wednesday most Opec ministers were content with prices and not inclined now to reduce output.

A week ago, influential Saudi Oil Minister Ali al-Naimi also described a US crude price of around US$62 as reasonable.

"Now, there is no inclination to make any amendment," Kuwait's Sheikh Ali told Al Arabiya television.

That view was echoed on Wednesday in fellow Opec countries Libya and Qatar.

Felipe Calderon, president-elect of the world's ninth oil exporter Mexico, however said on Wednesday he was worried about the fall in oil prices. Although not a member of the cartel, Mexico has worked with Opec in the past to support prices.

- REUTERS