MercoPress. South Atlantic News Agency

Oil prices jump 4% on OPEC cuts

Oil prices jumped four percent to nearly US$62 yesterday following a sharp drop in US crude stockpiles last week and as members of producer group OPEC enforced output cuts.

In electronic trading, US light crude hit a high of US$61.72, adding another 32 cents after US light crude settled at US$61.40 a barrel, up US$2.05, in the open-outcry session.

London Brent was US$2.19 higher at US$62.05 a barrel.

US government data showed crude stocks in the world's top oil consumer fell 3.3 million barrels last week after bad weather shut the Louisiana Offshore Oil Port, the nation's largest oil import terminal, for three days last week.

The closure contributed to a steep drop in imports and countered analyst expectations that crude inventories had risen by 2.6 million barrels last week. Distillate and gasoline stocks were also lower.

Adding support to prices, OPEC members are showing signs of enforcing a 1.2 million barrel per day production cut agreed last week at an emergency meeting in Qatar.

An Iranian official yesterday said Iran had informed customers it was cutting supplies by 176,000 barrels per day (bpd) in November.

US crude had already risen 54 cents on Tuesday after Abu Dhabi's state oil firm told major customers it would cut crude exports by about five percent in November.

Leading OPEC producer Saudi Arabia is shouldering the greatest part of the cut and told clients earlier this week it would reduce November supplies.

A Nigerian official said its national oil company would maintain a five percent output cut in November after a voluntary five percent cut to October supplies.

Nigeria's production has also been disrupted by militant attacks and yesterday oil company sources said villagers had invaded four pumping stations in Nigeria's southern Delta.

Doubts OPEC would abide by its agreement helped to push U.S. crude down to US$56.55 a barrel last week, the lowest level this year.

Some analysts still say OPEC has yet to prove its determination, but others said the producer group had gained experience in how to stave off any price collapse that it would now put to good use.

"They have learnt a considerable amount in the last few years about micro-managing the market," said John Waterlow of Wood Mackenzie consultancy