NEW YORK (Nov. 5, 2008) — Oil prices jumped nearly 11 percent Nov. 4 on signs Saudi Arabia had made substantial cuts in its crude exports and as global financial markets rallied.
Reuters reported that Saudi Arabia has reduced exports after the Organization of Petroleum Exporting Countries (OPEC) agreed last month to lower output, according to trade sources, with some estimating the world´s top exporter had cut shipments by around 900,000 barrels per day from a peak in August.
U.S. crude rose $6.97 at $70.88 a barrel by 1:31 p.m. EST yesterday. London Brent crude was up $6.51 at $66.99 a barrel.
Crude prices have plummeted from a record above $147 a barrel in July as the global credit crisis has hit the wider economy, dampening fuel demand in major consumer nations, including the U.S.
The steep drop prompted OPEC to agree to reduce output by 1.5 million barrels per day at an emergency meeting last month, and some members have called for additional reductions, Reuters said.
“Saudi Arabia has told major oil companies that it will restrict the volume they can load this month, answering skepticism about the kingdom´s compliance with OPEC´s October 24 deal to cut output," Mike Fitzpatrick, vice president at MF Global, wrote in a research note.
In addition to Saudi Arabia, other OPEC members were also showing signs of throttling back output.
The United Arab Emirates has reduced its production to around 2.3 million barrels per day (bpd) from around 2.5 million bpd, a top state oil company official said.
Algeria was reducing oil output by 71,000 bpd in line with OPEC´s supply cut decision, the Algerian official news agency APS said, quoting the country´s Energy and Mining Ministry.
Qatar has cut exports to Asia by about 40,000 bpd, effective this month, Energy Minister Abdullah al-Attiyah told Reuters.
A poll of analysts ahead of U.S. weekly government inventory data forecast U.S. crude oil stocks rose by 1.1 million barrels last week. The analysts predicted a rise of 1.3 million barrels in distillate inventories and a decline of 1 million barrels in gasoline stocks.
This report was published by Automotive News, a sister publication of Tire Business.