Oil prices rally as OPEC expected to cut output<\/p>\n
Sujata Rao, Reuters, London<\/p>\n
World oil prices rose to their highest levels in almost three
\nweeks on Monday as expectation mounted that OPEC will agree to
\ncut output when it meets in June.<\/p>\n
London benchmark Brent crude futures stood 43 cents higher by
\n1200 GMT to $25.53 a barrel, while U.S. light crude was 27 cents
\nhigher to $27.99 in electronic trade.<\/p>\n
\"The market is moving on the perception of what OPEC's
\nstrategy will be when they meet on June 11 and so far all the
\nindications are they will cut to bring the market back in
\nbalance,\" said Commerzbank analyst Steve Turner.<\/p>\n
\"The second factor is the U.S. stocks, where so far inventory
\nbuilds have failed to materialize,\" he added.<\/p>\n
On Monday, OPEC kingpin Saudi Arabia, keeping to an April
\ncartel pact to reduce crude supplies, told Western customers to
\nexpect up to a fifth less oil in June while Asian buyers will see
\na six to seven percent cut in supply.<\/p>\n
OPEC President Abdullah al-Attiyah said on Friday that the
\ncartel needed to implement more supply cuts to make room for a
\npossible resumption of Iraqi exports.<\/p>\n
Attiyah traveled to Moscow on Monday, following an OPEC
\ninvitation to producers outside the cartel to attend the June
\nmeeting. Russia is the world's leading non-OPEC oil exporter.<\/p>\n
Some analysts see prices rising further as an expected OPEC
\ncut will coincide with U.S. oil stocks far below normal and a
\nreceding prospect of a speedy return of Iraqi crude exports.<\/p>\n
Iraq's oil industry head Thamir Ghadban said on Sunday Baghdad
\nwould have to push back its oil production target of 1.5 million
\nbarrels per day (bpd) by about a month after receiving a clearer
\npicture of damage assessment to facilities.<\/p>\n
The sector, battered by 12 years of economic sanctions, is now
\nsuffering from looting and insecurity, he said.<\/p>\n
Ghadban had earlier said Iraq aimed to boost output to half
\nits pre-war rate by end-May, up from 200,000 bpd now.<\/p>\n
\"We shall meet that target at a later date -- perhaps by the
\nend of June,\" Ghadban said.<\/p>\n
But demand too has suffered as Asian economies are ravaged by
\nthe deadly SARS epidemic. On Monday China's largest refiner
\nSinopec said it was cutting production by up to five percent as
\nreduced travel due to SARS was hitting sales of oil products.<\/p>\n
But Commerzbank's Turner said the weak Asian situation was
\ncountered by robust demand in the United States.<\/p>\n
\"This is reflected in the fact that we are not seeing the
\nstock builds that we should be seeing at this time of the year,\"
\nhe said.<\/p>\n
U.S. crude stocks are now 12 percent under year-ago levels and
\nthe start of the summer driving season at the end of May will
\nbuoy gasoline buying and potentially eat further into already
\ntight crude stocks.<\/p>",
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