LONDON, 8 January 2005 — Oil prices continued to rise yesterday following a sharp spike a day earlier on reports of a possible strike in Venezuela and signs that OPEC producers may cut output again later this month, analysts said.
New York’s main contract, light sweet crude for delivery in February, climbed by 34 cents to $45.90 per barrel in early deals, after surging by $2.17 on Thursday.
In London, the price of Brent North Sea crude oil for delivery in February, rose by 25 cents to $43.10, after jumping by $2.34 a day earlier.
Traders said a number of factors appeared to have been behind the recent rally, including a reported labor dispute in Venezuela, signs OPEC producers may cut output again later this month and a fall in US natural gas stocks. “Numerous explanations have been put forward on the newswires to account for the move, including a larger than expected draw in US natural gas inventories, fresh concern over winter fuel shortages, fears of a strike by oil workers in Venezuela and concern that OPEC is preparing to cut production again at the end of the month,” Barclays Capital analysts commented.
“No doubt all of these factors played a part in contributing a positive backdrop to (Thursday’s) trading environment. However a move of this magnitude is becoming increasingly normal ...” Members of the Organization of Petroleum Exporting Countries (OPEC) are due to meet at their Vienna headquarters on Jan. 30 to review output.
Iranian Oil Minister Bijan Namdar Zanghaneh told reporters at a regional energy conference in New Delhi Thursday: “The market is oversupplied. There is no doubting it.”
The organization agreed in Cairo last month to reduce production by one million barrels a day from the start of 2005 to bring the organization closer to its official output ceiling of 27 million barrels.