Oil prices rise on production cut-back fear, unrest in Nigeria
OIL prices have begun to climb again in fears that producer cartel - Organisation of Petroleum Exporting Countries (OPEC) is set to cut back productions to halt the recent price slide. Besides, reports of unrest at Shell plants in Nigeria also fuelled Monday's rebound.
United States (U.S.) light sweet crude was trading at $42.95 a barrel in Monday trade, after hitting lows of N42.05 on Friday, while Brent traded at $39.65 a barrel.
Warmer weather in North America and healthier U.S. fuel stocks triggered at 14 per cent drop in oil prices last week.
OPEC members are set to meet on December 10 in Cairo, to discuss the oil price situation.
Kuwaiti Oil Minister, Sheikh Ahmad al-Fahd al Sagah, told reporters on Saturday that there was too much stock available in the market, and suggested a return to quota regime.
"For our part, if this price slide will continue as has happened in the past 48 hours, I think we have to ... cut all over-production," he said.
Estimates suggest that OPEC countries, between them the source of about one-third of the world's oil - are pumping as much as two million barrels a day above the cartel's quota of 27 million barrels.
Similarly, Iranian officials have made it clear that they want over-production stopped.
"OPEC members should go back to quota levels, said Hossein Kazempour Ardebili, Iran's OPEC governor.
However, according to Iranian Oil Minister, Bijan Namdar Zanghaneh, OPEC is likely to stick with its current production quota and price band when it meets in Cairo on December 10.
"We feel that there is no consensus to make a change in the price band at the moment. I don't think this consensus will be reached at the next meeting", the minister told reporters on Monday.
Analysts agreed that OPEC was unlikely to announce a quota cut this week.
"OPEC members still sound as though they would like to cut some oil from the market, but this may be achieved through re-imposing the current quota more strictly than pre-emptively cutting," said Simon Wardell, energy analyst at the World Markets Research Centre.
OPEC officially likes the average price of a "basket" of its oil products to stay between $22 and $28 a barrel.
Quota busting is a fact of life in OPEC
The recent gains in oil prices - the record for U.S. light crude was $55.67 in October, have left that far behind.
OPEC President, Purnomo Yusgiantoro, suggested on Friday that a more realistic band would be $28-32, while some members have advocated an even higher range.
The falls had been triggered when the Energy Information Administration (EIA) said last week that U.S. crude stocks were 3.5 per cent higher than a year ago.
Analysts also attributed the fall to mild early-winter weather, which has tempered demand for heating oil in the U.S.
Monday's oil price rise was also fuelled by reports that protesters had occupied three oil platforms in Nigeria.
Production of about 70,000 barrels of crude a day has been halted at two occupied Shell platforms and 75 workers and being held.
"About 200 youths occupied two flow stations, Ekulama I and Ekulama II, a Shell spokesman told the AFP news agency.
ChevronTexaco's Robertkiri platform has also been occupied, Reuters reported, affecting production of 20,000 barrels per day.
There were no reports of violence.
