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To: ms.smartest.person who wrote (1539)	10/6/2006 3:40:55 PM
From: ms.smartest.person	Read Replies (1) \| Respond to of 3198

Crude Oil Rises on Speculation of Further Cuts by OPEC Nations By Grant Smith Oct. 5 (Bloomberg) -- Crude oil rose from a seven-month low, surpassing $60 a barrel, on speculation that the Organization of Petroleum Exporting Countries will cut production. OPEC will reduce supply by 1 million barrels a day, with Saudi Arabia, the group's largest exporter, cutting 300,000 barrels, Reuters reported, citing an unidentified group delegate. Kuwait's oil minister said there is ``no agreement'' to reduce output. A Qatari oil ministry official who asked not to be identified said he had not been contacted about cuts. Crude oil for November delivery rose as much as $1.56, or 2.6 percent, to $60.97 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract traded at $60.85 at 12:57 p.m. London time. ``They are probably having a conversation about whether to make an announcement intra-meeting, which smacks a bit of panic, or to have an informal decision to cut production and announce it at the meeting in December,'' said Craig Pennington, global leader of energy research at Schroder Investment Management Ltd. in London. OPEC President Edmund Daukoru said the group is considering an emergency meeting to discuss production, Agence France-Press reported. The Brent crude contract advanced $1.59, or 2.7 percent, to $60.81 a barrel on London's ICE Futures exchange. Kuwait's oil minister denied reports of an OPEC agreement to cut production, saying he would be more concerned if crude falls below $50 a barrel. ``There is no agreement for an informal cut, or any type of cut,'' Sheikh Ali-Jarrah al-Sabah said in a telephone interview from Kuwait today. ``I have had no consultations with other ministers,'' he said, adding that ``$50 a barrel is a worry.'' Basket Price OPEC decisions usually refer to the group's crude oil basket price, which fell 79 cents to $54.19 a barrel on Oct. 4, the latest available data. The daily price index is a weighted average of 11 crude blends produced by OPEC states. ``There's little secret OPEC will cut production if prices slip below $55 towards $50 a barrel,'' said Simon Wardell, energy research manager at Global Insight in London. All OPEC nations will reduce output except Iraq, which is exempt from quotas, and Indonesia, Reuters reported. The 11-member organization's production fell 0.6 percent to 29.64 million barrels a day in September, the second consecutive monthly decline, a Bloomberg News survey of oil companies, producers and analysts showed. Nigeria and Venezuela said last week they will cut output by a combined 170,000 barrels a day in response to the slide in oil prices since mid-July. ``Unless OPEC calls an emergency meeting in the next couple of weeks, oil prices may slide to the $55, $50 level to test the organization's resolve,'' said Tony Regan, Singapore-based lead consultant at industry adviser Tri-Zen International Pte. U.S. Refineries Lower U.S. refinery operating rates, a build in oil product inventories and warm weather are capping demand for oil. A U.S. Energy Department report yesterday showed that crude oil supplies rose 3.36 million barrels to 328.1 million barrels last week. Supplies of distillate fuels, including diesel and heating oil, rose 178,000 barrels to 151.5 million barrels, 19 percent above the five-year average. U.S. refineries operated at 89.9 percent of capacity last week, the lowest since May, according to the Energy Department. Analysts surveyed by Bloomberg had expected refineries to operate at 91.6 percent. Oil yesterday closed at $59.41 after touching $57.75 a barrel, the lowest since Feb. 16. New York-traded crude has fallen about 22 percent since reaching a high of $78.40 on July 14. To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net . Last Updated: October 5, 2006 08:02 EDT bloomberg.com