OPEC production cuts send oil prices higher

| October 5, 2006 | 0 Comments

Crude oil prices rose on Thursday after Organization of Petroleum Exporting Companies officials said they have reach an informal agreement to cut production by a minimum of 1 million barrels per day. All OPEC members are expected to make some cuts, including a decline of 300,000 barrels per day by Saudi Arabia. Analysts said that the decision was a signal that OPEC wants to keep prices at around $60 per barrel. Meanwhile, the US Secretary of Energy said that the global market is still in need of OPEC oil. Prices were also nudged upward by indications of more violence against oil facilities in Nigeria.

Brent crude November contracts added 91 cents to $60.13 per barrel in London, while West Texas Intermediate crude for November delivery gained 78 cents to $60.19 per barrel on the New York Mercantile Exchange. Natural gas prices were up as well, with Nymex November Henry Hub up by nearly 3 cents to $6.265 per million British thermal units despite an increase of 73 billion cubic feet in inventories, which put current stockpiles at over 3.3 trillion cubic feet, near the record of 3.5 trillion cubic feet.

In the metals market, copper added 3.8 percent to $7,300 per tonne after London Metal Exchange stockpiles declined by 2,550 tonnes. Zinc was also up, by 4 percent to $3,436, when LME inventories dropped by 1,625 tonnes. Nickel and aluminium prices were each 2.9 percent higher to $28,900 per tonne and $2,547.5 per tonne respectively.

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