Oil: Price jumps US$2 on Opec cuts

LONDON - Oil prices leapt more than 3 per cent to over US$61 on Wednesday after other Opec members followed Saudi Arabia's lead in enforcing output cuts and US fuel stocks unexpectedly fell.

Prices also drew strength from news of fresh strife in Nigeria, where militant unrest has shut in more than a quarter of the Opec member's production capacity.

US light crude settled up US$2.05, or 3.45 per cent, to US$61.40 a barrel. London Brent was US$2.19 higher at US$62.05 a barrel.

US crude had already risen 54 cents on Tuesday after Abu Dhabi's state oil firm told major customers it would cut crude exports by about 5 per cent in November.

On Wednesday, an Iranian official said Iran had also informed customers it was cutting supplies by 176,000 barrels per day (bpd) in November.

Leading Opec producer Saudi Arabia, which is shouldering the greatest part of a 1.2 million bpd production cut agreed last week, had told clients earlier this week it would reduce November supplies.

A Nigerian official said its national oil company would maintain a 5 per cent output cut in November after a voluntary 5 per cent cut to October supplies.

Nigeria's production has also been disrupted by militant attacks and on Wednesday oil company sources said villagers had invaded four pumping stations in Nigeria's southern Delta.

It was not immediately clear how much impact the invasion had had on oil supplies.

Even without Opec supply curbs, US oil imports fell last week causing US crude inventories to fall by 3.3 million barrels, according to US government data released on Wednesday, above analyst expectations.

At the same time, distillate stocks, including heating oil, fell by 1.4 million barrels, compared with the 1.1 million barrel decline forecast.

Petrol inventories, which had been expected to decrease by 600,000 barrels, dropped by 2.8 million barrels.

Doubts Opec would abide by its agreement helped to push US crude down to US$56.55 a barrel last week, the lowest level this year.

Some analysts still say Opec has yet to prove its determination, but others said the producer group had gained experience in how to stave off any price collapse that it would now put to good use.

"They have learnt a considerable amount in the last few years about micro-managing the market," said John Waterlow of Wood Mackenzie consultancy.

Opec's success in shoring up the market could also depend on the weather.

Temperatures in the US Northeast, the biggest oil consuming region in the world, will be colder than usual and higher heating demand was expected over the next five days, US based private forecaster Meteorlogix said on Tuesday.

Private WSI Corp on Monday predicted warmer-than-normal Northeast temperatures in November, but said they would be followed by cooler weather in December and January.

- REUTERS