SINGAPORE (Reuters) – Oil edged up above $63 a barrel on Monday as two OPEC members trimmed production in an effort to tighten swollen supplies and halt a slide in prices.
U.S. light sweet crude for November delivery traded up 15 cents at $63.06 a barrel by 0606 GMT, extending gains of 4 percent last week. London Brent rose 22 cents to $62.70.
Nigeria last week said it would cut exports by 5 percent from October 1, while Venezuela said it would trim its output of about 2.5 million barrels per day (bpd) by 50,000 bpd, to stem a 20 percent price fall from a record-high of $78.40 in July.
Gulf OPEC powers Saudi Arabia and Kuwait showed no overt signs of tightening their taps, which analysts said blunted the impact of the measures, though prices have picked up from a fall to a six-month low below $60 early last week.
“Prices have risen mainly because of weekend short-covering. Although news of Nigeria and Venezuela cutting output did lift prices a little, it won’t cause prices to go much higher since there is plenty of crude available in the market,” said Sano Keiichi of the commodities business unit at Sumitomo Corp.
Iran, the world’s fourth-largest oil exporter and typically hawkish on prices, will support any OPEC move to bring crude oil prices back to “acceptable” levels, Iran’s OPEC Governor Hossein Kazempour Ardebili said on Sunday.
Prices also picked up after BP Plc (BP.L) said it had shut in 25,000 to 30,000 bpd of oil output following a gas leak at its Lisburne oilfield, a smaller stream in Alaska, where BP has restored most of its massive Prudhoe Bay flow after a near two-month outage.
Iran’s political tensions with Western nations over its nuclear ambitions continue to lurk as another round of nuclear talks with Tehran wound down on Thursday without a deal, ahead of an early October deadline given by the West to EU foreign policy chief Javier Solana to reach an agreement.
Still, despite the recent flow of bullish news, speculator sentiment continued to shift away from a further recovery in prices in the week ended September 26, trimming net length by nearly 9,000 lots to a total 13,685 lots, the lowest since speculators turned net short in February, exchange data showed.
Prices have been under immense pressure as U.S. inventories of distillates surge to their highest level in seven years and natural gas stocks are at record levels for the time of year, highlighting ample supply of winter heating fuels.
Recent weak economic data has also planted doubts about the sustainability of U.S. economic growth in late 2006 and early next year.
But Goldman Sachs said it expected robust demand to continue into the fourth quarter. Combined with a decline in gasoline production and an expected decrease in gas imports, it said oil prices should continue to find support till the end of this year.