Light sweet crude oil for November delivery on the New York Mercantile Exchange rose to US$59.94 a barrel. Oil prices rose by more than one dollar in anticipation of an output cut of 1 million bpd by OPEC when it meets later this week, as well as colder than expected weather forecasts. The market is on tenterhooks whether OPEC will reduce its official output quota or reduce production from current levels, which are already slightly below the quota. The last time OPEC reduced its output, also by 1 million bpd, was in December 2004 when oil traded slightly above US$40 a barrel.
Since mid-July, the price of crude oil has dropped by about 25% due to rising global inventories, concerns about slowing economic growth and a hurricane season that caused no serious damage. OPEC, in its monthly oil market report, has cut global demand forecast by 100,000 bpd. It also expressed concern about competition from nonmember producers, saying non-OPEC supply growth has picked up in 2006 by 1.1 million bpd and is expected to grow next year by 1.8 million bpd.
17-Oct-06 
