Oil Prices Jump on Report Output Is Cut

Oil prices rallied on world markets Monday amid an International Energy Agency report that the Organization of Petroleum Exporting Countries throttled back its oil production by more than 1 million barrels a day in January.

Analysts said prices also were buoyed by the Energy Department’s revised forecast that oil demand in the United States, the largest oil-consuming nation, will rise 0.8% to 16.66 million barrels a day this year from the previous estimate of 16.51 million barrels a day.

On the New York Mercantile Exchange, West Texas Intermediate, the benchmark U.S. crude, climbed 38 cents to $17.66 a barrel for immediate delivery.

On the U.S. Gulf Coast spot market, West Texas Intermediate added 35 cents to $17.45 a barrel.

The International Energy Agency in Paris said OPEC oil production plummeted to 17 million barrels a day in January from 18.3 million barrels a day in December, primarily because the cartel’s Persian Gulf members turned down their taps.

The IEA said the production decline reflected buyer reluctance to purchase OPEC oil, which is selling for less than the cartel’s official $18-a-barrel benchmark price on the open market.

On the European spot market, where oil is sold to the highest bidder, the United Arab Emirates’ Dubai light--the key OPEC crude from the Persian Gulf--gained 15 cents to $15.55 a barrel.