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Oil prices rebound above 60 dollars on OPEC
Cat : Sustainable development
Date : 2006-10-09 18:33:48                      Reader : 330
stabilize oil prices to avoid shooting up or down sharply .

 

Sustainable Development

Oil prices rebound above 60 dollars on OPEC, North Korea news

 

LONDON (AFP) - World oil prices jumped back above 60 dollars per barrel after OPEC's president called for the cartel to slash output and following the nuclear test announced by North Korea.

Dealers said the news from Pyongyang had sparked geopolitical concerns that the development might embolden Iran to pursue its own nuclear energy programme.

New York's main contract, light sweet crude for delivery in November, leapt 82 cents to 60.58 dollars per barrel in electronic deals before the official opening of the US market Monday.

In London, Brent North Sea crude for November delivery jumped by 1.08 dollars to 60.91 dollars per barrel in electronic trading.

OPEC President Edmund Daukoru has proposed to members of the Organization of Petroleum Exporting Countries that they cut their oil output by one million barrels per day (bpd), but no agreement on such a move has been reached, a spokesman for the cartel told AFP on Monday.

"There has been a suggestion by the OPEC president to the OPEC ministers to consider cutting by one million (bpd) since the market is heavily oversupplied but there is no agreement yet," the spokesman said.

The oil market has been watching for several days for any signs that OPEC might cut output to shore up prices.

Barclays Capital analyst Kevin Norrish remained sceptical, however.

"Our view is that the major OPEC producers, such as Saudi Arabia, do strongly favour a production cut, though a clear consensus on this issue from all OPEC members has yet to emerge and some further work is required," he said.

A cut in output is seen as aimed at supporting world oil prices, which have tumbled by more than 20 percent since striking record peaks earlier this year, owing to fading supply concerns.

Elsewhere, Pyongyang announced Monday it had carried out its first test of an atomic bomb in what the official Korean Central News Agency described as a "historic event" aimed at bolstering peace and security.

Energy prices rose on concerns that the news would encourage Iran to pursue its own nuclear programme despite the threat of UN sanctions, according to Dariusz Kowalczyk, senior investment strategist with CFC Seymour in Hong Kong.

"Geopolitical risk has increased after the North Korean nuclear test," said Kowalczyk.

"This will increase risks to supply stability of oil."

Although North Korea is not an oil-producing nation, Iran is the world's fourth largest crude producer and the second biggest member of OPEC after kingpin Saudi Arabia.

Over the weekend, Iran's President Mahmoud Ahmadinejad vowed to impose retaliatory sanctions on world powers if Iran is penalised by the United Nations Security Council over its nuclear programme, according to state media reports.

The United States is calling for economic sanctions against Iran unless Tehran halts uranium enrichment activities.

Analysts warn that sanctions against Iran could prompt the Islamic republic to disrupt oil exports, which would lead to a surge in crude prices.

On Sunday, Iran threw its support behind moves by OPEC for an emergency meeting to cut its long-standing output quota.

The 11-member cartel has maintained an output quota of 28 million barrels per day since June 2005.


 
 
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