SINGAPORE, (AP) – Oil prices held above $62 a barrel Friday, a day after a spike caused by OPEC’s decision to maintain current production levels for now but to cut output in February.
Light sweet crude for January delivery rose 13 cents to $62.64 a barrel in midafternoon Asian electronic trading on the New York Mercantile Exchange. A day earlier, prices leaped $1.14 after OPEC’s announcement.
At London’s ICE Futures exchange, Brent crude for February, the new front month, changed hands at $63.11 a barrel, up 22 cents.
The delayed cuts by the Organization of Petroleum Exporting Countries, spurred by concerns of bulging worldwide inventories and anticipated non-OPEC supply growth in 2007, were seen as a warning to the world’s major consuming nations.
But Saudi Oil Minister Ali Naimi said the price of crude did not figure in the decision.
“What we’re working toward is to rebalance the market and this decision does this,” he said.
In its official statement, OPEC said it expects non-OPEC supplies to grow by 1.8 million barrels a day in 2007, the biggest one-year jump since 1984, and about 500,000 barrels per day more than anticipated global demand growth of 1.3 million barrels.
The cartel pledged to cut production in February by half a million barrels a day.
By delaying action, OPEC left itself a window to decide against a cut should demand spike due to a colder-than-expected winter or stronger-than-expected economy.
“They seem content to let natural winter demand eat away at stocks which, in their view, are ‘out of balance,’ ” said John Kilduff, senior vice president for energy risk management at Fimat USA.
“The next tranche of production constraints will begin after the bulk of winter has passed and just before spring replenishment,” he said.
In other Nymex trading, heating oil futures rose 0.65 cent to $1.7830 a gallon, while natural gas futures fell 2.6 cents to $7.529 per 1,000 cubic feet.