Oil Prices Rise Amid Signs of Plan to Curb Production
U.S. oil prices closed above $15 a barrel Monday for the first time in four weeks, bolstered by signs that key Persian Gulf oil producers have a plan to curb production.
West Texas Intermediate, the main American grade of oil, rose 29 cents a barrel to $15.21 for oil delivered next month on the futures market. Prices in the spot market, where actual barrels are traded, stood at $15.22 a barrel, up 30 cents a barrel. North Sea Brent, the main grade on world oil markets, advanced 30 cents to $13.65 for December loading.
November gasoline futures, underpinned by perceived tight supplies, rose 1.24 to 46.76 cents a gallon for the wholesale market.
The push behind the market’s rise was a statement Monday from OPEC producers within the Gulf Cooperation Council, which met over the weekend and designed a plan to curb production. The four GCC members proposed a production ceiling of 18.5 million to 19 million barrels a day for the 13-nation Organization of Petroleum Exporting Countries.
“If it removes barrels from the market, it’s going to tighten things up,” said Peter Beutel, an oil industry analyst in New York with Elders Futures Inc.
Beutel and other analysts said, however, that they doubted the cartel could get prices up to its goal of $18 a barrel.
The agreement was forged by Saudi Arabia, Kuwait, Qatar and the United Arab Emirates, plus Iraq and will be presented at OPEC’s full ministerial meeting in November, the Kuwait News Agency reported.
But the plan included giving Iraq an equal quota with Iran, and Iran on Monday rejected the plan, leaving its future uncertain.
News of the tentative agreement initially sent world oil prices up 50 cents a barrel in overseas markets. Overproduction by OPEC members sent oil prices skidding lower in recent weeks. After falling to below $12.30 a barrel two weeks ago, oil prices began climbing higher amid optimism that the OPEC meetings could end overproduction.
Analysts said that bringing the UAE and other Gulf Arab producers in line with Saudi Arabia will simplify the task of bringing down production before the meeting of OPEC’s price monitoring and long-term strategy committees later this week.
