Oil rises above $46 as investors eye OPEC cuts

[March 09, 2009]  SINGAPORE (AP) -- Oil prices rose to above $46 a barrel Monday in Asia as investors anticipated another OPEC production cut will shrink global supplies.

Benchmark crude for April delivery rose 61 cents to $46.13 a barrel by midafternoon in Singapore on the New York Mercantile Exchange. Oil prices rose $1.91 on Friday to settle at $45.52.

The Organization of Petroleum Exporting Countries plans to meet March 15 in Vienna, and some of the group's leaders have said a production cut is likely.

Iranian Oil Minister Gholam Hossein Nozari was quoted by the official IRNA news agency Sunday saying OPEC members have "almost" completely complied with the 4.2 million barrels a day of output quota reductions announced since September.

Nozari also said OPEC should coordinate supply policy with non-OPEC producers.

"Oil is rallying primary due to the speculation that OPEC will cut production," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. "The market in the last week or two has paid more attention to supply because the OPEC cuts have shown up in the data."

The government said last week that U.S. crude inventories fell for a second week in three, halting a trend over the previous six weeks that saw inventories jump more than 30 million barrels.

Most analysts expect OPEC to announce a cut of at least 500,000 barrels a day, though the cartel's biggest producer, Saudi Arabia, hasn't yet commented on the possibility of further output reductions.

"The Saudis are the most important voice," Shum said. "They typically don't say anything until the day before a meeting."

Oil has traded near $40 a barrel since December after plummeting from $147 in July as crude demand fell amid the worst global recession in decades.

Oil investors often look to stock markets as a measure of sentiment on the overall economy, but crude has risen from below $35 a barrel last month despite the major U.S. equity indexes plunging to 12-year lows last week.

Oil rose Friday even as the Labor Department said America's unemployment rate rose to 8.1 percent in February, the highest since late 1983.

"Even though we have rather grim economic news, the oil market has broken away from the equities markets," Shum said. "I think oil may be a little overdone given that there's no good news on the economic front."

In other Nymex trading, gasoline for April delivery rose 1.75 cents to $1.35 a gallon, while heating oil gained 1.36 cents to $1.24 a gallon. Natural gas for April delivery was up 1 cent at $3.96 per 1,000 cubic feet.

Brent prices rose 28 cents to $45.13 on the ICE Futures exchange in London.

[Associated Press; By ALEX KENNEDY]

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