Oil prices spike above US$62 a barrel

15-Dec-06

In a surprise move, oil prices rose above US$62 a barrel Thursday after OPEC decided to keep its output steady for now but pledged to cut production in February by half a million bpd. Light sweet crude for January delivery rose by US$1.14 to settle at US$62.51 a barrel on the New York Mercantile Exchange. Brent crude for January was up 90 cents at US$62.23 a barrel. OPEC's decision indicates that the group intends to limit inventories, keep a floor under prices and aim for higher price levels. The price of crude did not weigh much on the decision, but the decision has been guided by a rebalance in the market. By delaying action until February, OPEC has left itself a window to decide against a cut should demand spike due to a colder-than-expected winter or stronger-than-expected economy. OPEC expects non-OPEC supplies to grow by 1.8 million bpd in 2007, the biggest one-year jump since 1984, and about 500,000 bpd more than anticipated global demand growth of 1.3 million barrels.