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NEW YORK - Oil prices bounced back from a 19-month low today on worries producer group Opec would deepen its supply cuts to stem a 15 per cent slide since the start of the year.
US crude settled up US$1.11 to US$52.99 a barrel, after falling briefly to US$51.65, the lowest level since late May 2005. London Brent rose US$1.25 to US$52.95 a barrel.
"There is short covering ahead of the long weekend along with concern about the possibility of a surprise Opec meeting," said Nauman Barakat, senior vice president at Macquarie Futures USA. Floor trading at the New York Mercantile Exchange will be closed on Monday for Martin Luther King Jr. Day.
Oil prices had been in steady decline over the past two weeks, losing more than US$8 a barrel, on fund selling and mild weather that has cut heating fuel demand in the world's top energy consumers.
The slide, the biggest two-week drop in two years, rang alarm bells for members of Opec, which has been cutting output since autumn to stem crude's losses from record heights near US$80 last summer.
Opec President Mohammed al-Hamli, also the UAE oil minister, told Reuters yesterday that the group is deeply concerned by the drop in oil prices this year and stands ready if necessary to bolster the world market.
Opec first pledged to implement a 1.2 million barrel cut from Nov. 1, and later increased it to a 1.7 million cut from Feb. 1, to shore up prices. Some ministers have said in the past that prices should be kept above US$60.
"People have figured out that there might be some Opec action this weekend. They may consult by phone and decide to hold an emergency meeting," said Tony Nunan, manager at Tokyo-based Mitsubishi Corp.'s risk management unit.
The New York Mercantile Exchange set daily volume records of more than 800,000 crude contracts yesterday, signaling that investors were not fleeing oil but instead betting that prices would fall further.
"The dramatic and impulsive decline ... suggests that the downside remains in focus," Barclays Capital analysts said in a report. "Beyond the short term, in the absence of a run above US$57.50, crude oil remains vulnerable to the downside and further weakness towards US$50 over the rest of the month."
(Additional reporting by Randy Fabi in London, Maryelle Demongeot in Singapore and Janet McBride in London)
- REUTERS
