Oil: Price rises as Opec says may cut supply

NEW YORK - Oil prices rose on Monday as the Opec cartel said it might cut supply as the Northern Hemisphere winter draws to a close.

US crude oil settled 28 cents higher at US$47.44 a barrel, within a US$45-US$50 range held over the past five weeks. London Brent crude settled 25 cents higher at US$45.53 a barrel.

Prices have bounced from a one-month low last week after the International Energy Agency (IEA) adjusted its forecasts for this year, raising its expectation for demand growth and lowering its forecasts for new supply.

The IEA showed heightened need for oil from the Organisation of the Petroleum Exporting Countries, but the cartel remains more focused on a feared slowdown in second-quarter demand.

Last Friday, Opec's acting Secretary-General Adnan Shihab-Eldin told Reuters the group might need to cut supply for the second quarter even if consumption stayed robust, and would need a faster, bigger cut if demand were to fall sharply.

Oil traded lower in the morning but rose through the day as independent traders went long.

"It couldn't get any traction at the lower levels, so it's getting support from the possibility that Opec might cut in the second quarter," said Marshall Steeves, analyst at Refco in New York.

The chances of Opec trimming production before the cartel's March 16 meeting in Iran have been diminished, but not eliminated, by stronger-than-expected demand, he said.

Opec agreed in January to keep output steady for the time being, but warned that it could agree snap cuts by telephone if prices fell sharply or stockpiles rose, serving notice to traders not to count on a sustained price fall.

Some cartel members have staked out US$40 a barrel for US crude as a level they are prepared to defend.

Oil speculators, the most liquid segment of the market, have taken note of Opec's warning and have stayed long, trimming their positions by just over 3,000 lots to hold 27,557 lots of net length in crude futures by Feb. 8, data showed on Friday.

On the supply side, Iraq has resumed its northern oil exports after supplies were halted by attacks since mid-December, industry sources said.

- REUTERS