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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: Skywatcher who wrote (29655)	11/11/1999 4:06:00 AM
From: IQBAL LATIF	Respond to of 50167

Oil at highest level for almost three years By Paul Solman in London Oil prices rose to their highest level for almost three years yesterday, amid renewed signs that producers intended to stick to the output cuts that have staunched the flow of crude on to the global market. December Brent blend - the London-traded benchmark futures contract - jumped to $24.42 a barrel at one stage, its highest since January 1997 and a gain of $1.50 since the beginning of the week. New York light crude opened strongly, rising 50 cents to $24.50. Oil shares also moved higher in heavy trading on the London Stock Exchange, with Royal Dutch/Shell rising 3.7 per cent, Enterprise Oil up 7 per cent and British Borneo up 10 per cent. The sector accounted for 8 per cent of all shares traded. Analysts and traders said the oil market took a big psychological boost from comments by ministers from Venezuela and Kuwait that production cuts, agreed in March under the auspices of the Organisation of Petroleum Exporting Countries, were likely to be extended beyond their original deadline of March 2000. The comments coincided with figures suggesting the cuts were working. "There's nothing the market likes more than being preached to by the converted, and it's standing up and saying - 'I believe'," said one trader yesterday. An analyst added: "Opec has learned in the past few months that it can have a dramatic effect on the market by making statements at the right time." A report published on Tuesday by the International Energy Agency, the Paris-based research group, said oil supplies held by leading industrialised nations dropped by 1.8m barrels a day in September. And the American Petroleum Institute's weekly estimate of US crude inventories, published late on Tuesday, reported that supplies had fallen by much more than expected last week. Oil prices have risen sharply this year on the back of the Opec-led cuts - excluding Iraq. The level of supply is estimated to be at 87 per cent of this self-imposed quota six months after the curbs began. Brent blend was about $10 a barrel at the beginning of the year amid a global market awash with oil and reduced demand caused by the Asian crisis. But decisive action by Opec members and other leading producers such as Mexico has turned the market around, and analysts say supply and demand is close to being back in balance. However, many analysts are sceptical that the output cuts will hold as prices continue to rise. "It's easy for Opec to stick to its line at the moment, but once producers are faced with turning customers away, they will have a much more difficult time. Nobody wants to lose market share," one said. Brent was $24.36 in late trading yesterday, a gain of 23 cents on the day, while New York light crude was up 45 cents at $24.48.