Prospect of OPEC cuts sends oil prices higher

Speculation that OPEC could decide to implement further production cuts during its meeting in Nigeria sent crude oil prices higher on Tuesday. Some cartel officials were quoted as saying that the cut is expected to add 500,000 barrels per day to the 1.2 million barrel per day cut introduced in November. Meanwhile, the US Energy Department is standing by its November prediction that global oil demand will go up by 1.5 million barrels per day next year. It also said that consumption of oil products in the US will be 300,000 barrels per day higher in 2007. Demand growth is also expected to be strong in China and in the Middle East.

January contracts for Brent crude added 51 cents in London in afternoon trade, to $62.35 per barrel, while West Texas Intermediate crude for January delivery was 66 cents higher to $61.88 per barrel on the New York Mercantile Exchange.

In the metals markets on Tuesday gold declined $1.90 to $628.30/$629.05 per troy ounce late in the day in London as buyers waited to see what the US Federal Reserve would do about interest rates. Lead dropped $35 by late in the day to $1,730 per tonne late in the day after reaching a new record of $1,790 per tonne in earlier trade. The decline came after the London Metal Exchange released figures showing that lead inventories had risen.

Three-month nickel dropped $1,200 to $32,800 per tonne, while tin fell $225 to $10,825 per tonne even though stockpiles were down. Copper dropped $90 to $6,842 per tonne. Aluminium was the only gainer on the day, adding $8 to $2,008 per tonne.

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