Crude oil rose more than 6 percent in New York, the biggest increase in two weeks, after the United Arab Emirates said it would reduce output to comply with OPEC"s supply curbs.
Crude oil rose more than 6 percent in New York, the biggest increase in two weeks, after the United Arab Emirates said it would reduce output to comply with OPEC"s supply curbs. Abu Dhabi National Oil Co., the biggest producer in the U.A.E., will reduce oil supply to Asia in January and February, according to a statement sent to buyers. OPEC agreed to a record production cut on Dec. 17 in response to collapsing demand because of the economic slowdown. Oil also advanced because the dollar dropped against the euro. ?There are signs that the U.A.E. and Saudi Arabia are abiding by their OPEC targets,? said Tom Bentz, senior energy analyst at BNP Paribas in New York. ?The dollar is weaker, which is probably also giving the market some support. Crude oil for February delivery rose $2.36, or 6.7 percent, to settle at $37.71 a barrel at 2:41 p.m. on the New York Mercantile Exchange, the biggest one-day gain for a contract closest to expiration since Dec. 11. Prices declined 11 percent this week and have dropped 74 percent from a record $147.27 on July 11.
Nymex and London"s ICE Futures Europe exchange, where Brent crude oil is traded, were closed yesterday because of the Christmas holiday.
Volume in electronic trading on the exchange was 73,221 contracts, as of 3:07 p.m. in New York. Volume totaled 165,884 contracts on Dec. 24, down 66 percent from the average over the past 3 months. No day so far this year has had volume of less than 100,000 contracts.
?Today will probably end up having the lowest volume of the year because so many people are off,? said Peter Beutel, president of Cameron Hanover Inc., an energy consulting company in New Canaan, Connecticut.
Open interest on Dec. 24 was 1.14 million contracts. The exchange has a one-business-day delay in reporting open interest and full volume data.
"In the Cards"
A decline in crude oil to $25 ?is in the cards,? Gulf Oil LP Chief Executive Officer Joe Petrowski said today in a CNBC interview. Gulf, a Newton, Massachusetts-based wholesaler, distributes motor fuel to 1,800 branded filling stations in the Northeast. ?The downside is well in gear,? he said.
Abu Dhabi National, known as Adnoc, will cut supplies of the Murban grade by 15 percent and the Upper Zakum grade by 3 percent next month, mostly in Asia. Adnoc said earlier this month it would meet all oil obligations for January.
The U.A.E. produced 2.35 million barrels of crude oil a day in November, making it OPEC"s fourth-largest producer, according to Bloomberg News estimates.
The reduction comes after the Organization of Petroleum Exporting Countries, supplier of more than 40 percent of the world"s oil, agreed to trim production targets by 2.46 million barrels a day starting next month.
Oil Market Stability
OPEC is ?determined to bring stability to the oil market? after prices tumbled from the July high, Saudi Oil Minister Ali al-Naimi told reporters at a conference in Doha, Qatar, on Dec. 21. Saudi Arabia has cut production by 1.2 million barrels a day from its peak this summer, al-Naimi said on Dec. 16.
The producer group may meet before its next scheduled summit in March, Venezuelan Energy Minister Rafael Ramirez said Dec. 23.
?There"s increased evidence that OPEC is following through with the promised cuts,? Beutel said. ?We won"t know until about Feb. 10 whether they have really carried through with the promises. It"s all guess-work now.?
It takes about four to six weeks for tankers to make the trip from the Persian Gulf to the Gulf of Mexico.
Brent crude oil for February settlement increased $1.76, or 4.8 percent, to settle at $38.37 a barrel on the ICE exchange.
Oil, gold and corn advanced because the dollar dropped against the euro. A weaker U.S. currency increases demand for commodities as a hedge and makes raw materials cheaper for buyers with euros, yen or sterling. The dollar weakened 0.2 percent to $1.4053 per euro from $1.4025 yesterday.
Japan, the world"s third-largest consumer of oil, said its crude imports fell for a second month in November as the country"s industrial output plunged the most in almost 55 years. Imports declined 12 percent to 18.35 million kiloliters (115 million barrels) last month, the Ministry of Economy, Trade and Industry said in a report today.
U.S. crude oil inventories dropped 3.1 million barrels to 318.2 million barrels last week, according to an Energy Department report on Dec. 24. The report showed that supplies of gasoline and distillate fuel, a category that includes heating oil and diesel, increased in the week ended Dec. 19.
Gasoline futures for January delivery rose 5.13 cents, or 6.5 percent, to settle at 84.4 cents a gallon in New York. The fuel touched 78.5 cents on Dec. 24, the lowest for gasoline to be blended with ethanol since the contract began trading in October 2005.
Heating oil for January delivery increased 4.67 cents, or 3.9 percent, to settle at $1.245 a gallon in New York.