LONDON (Reuters) – Oil held above $74 on Tuesday, as investors tracked a potentially catastrophic hurricane threatening Central America and OPEC stuck to supply curbs ahead of its meeting next week.
U.S. crude was up 10 cents at $74.14 by 1122 GMT, after trading electronically on Monday when the U.S. Labor Day holiday shut the New York trading floor. London Brent crude was down 10 cents at $73.31.
Felix, now a dangerous Category 5 hurricane, was due to hit land in Nicaragua and Honduras on Tuesday, though oil and gas producers had yet to evacuate rigs in the Gulf of Mexico, home to a third of U.S. crude and 70 percent of Mexican crude output.
“Helpfully for the oil price and OPEC, Hurricane Felix is on a westerly path that could reach Mexico’s Cantarell, the world’s third-largest oilfield, by the end of the week which suggests a picture of tight market supply,” said Richard Batty of Standard Life Investments.
Traders were also waiting for OPEC’s meeting on September 11, with expectations the exporter group will retain output curbs. A Reuters survey showed OPEC kept supply restricted last month.
Consumer nations have been urging the Organization of the Petroleum Exporting Countries to pump more crude as U.S. oil climbs back towards its all-time high of $78.77.
Analysts also are convinced OPEC must boost supplies to keep pace with growing demand this winter.
An OPEC source told Reuters on Tuesday the 12-member group may have to raise supplies by up to 1 million barrels per day (bpd) later this year.
OPEC officials have said repeatedly that — for now – the world has more than enough crude. The only member suggesting the possibility of an imminent supply boost was Indonesia, OPEC’s second smallest producer.
“If current high prices are due to inadequate supply, then we will propose current production level increase,” Indonesia’s OPEC governor Maizar Rahman told Reuters on Tuesday.
OPEC, source of more than a third of the world’s oil, agreed last year to lower production by 1.2 million barrels per day (bpd) from November 1 and by a further 500,000 bpd from February 1.