Oil prices stabilize around $19

Oil prices stabilize around $19

Agence France-Presse, London

The price of oil stabilised on Wednesday after two days of volatile trading, as the market digested the latest remarks from world crude producers about a possible pact to restrict output so as to give prices a boost.

A barrel of Brent North Sea crude for January delivery rose 15 cents in early deals to 18.90 dollars. Overnight, the December light sweet crude contract closed in New York at 19.15 dollars a barrel, up 72 cents.

Analysts said that after a week during which crude prices were marked down sharply, the market was now growing more sanguine about a possible deal between the Organization of Petroleum Exporting Countries (OPEC) and its rivals on output cuts.

OPEC wants rival producers outside the 11-nation club to sign up to output cutbacks of their own before it will proceed with a promised cut of 1.5 million barrels per day.

Fears that non-OPEC would resist such a pact drove oil prices down sharply in recent sessions to a 29-month nadir of 16.65 dollars a barrel in London on Monday.

But since then, big producers Mexico and Norway have promised cuts as long as Russia follows suit. Moscow had hitherto waxed reluctant about cutbacks, but has made more conciliatory noises in recent days.

"The market is clearly becoming optimistic that a non-OPEC deal can be reached, but there is also an element of positive sentiment filtering through from the stock markets about the world economy," said Lawrence Eagles, an oil expert with the GNI brokerage.

OPEC oil price rebounds

The OPEC basket oil price rebounded above 17 dollars, the cartel said Wednesday, after key rival producers Russia and Norway hinted at compromise in a tense stand-off launched last week.

The price, used by the grouping to set its production policy, stood at 17.06 dollars on Tuesday, after plunging to a low-point of 15.85 dollars on Monday, according to OPEC secretariat calculations.

The OPEC basket price, an average of seven world crudes, has slumped to two-year lows since the September 11 terror attacks compounded fears of a world economic slowdown.

It slipped even further after OPEC ministers last Wednesday launched a challenge to its non-OPEC rivals, saying they would cut output by 1.5 million barrels per day (bpd) but only if they cut by 500,000 bpd.

But markets were boosted Tuesday by signs that Norway was ready to cut its production if Russia does, and comments from Moscow that it could consider "supplementary measures" to boost sagging prices.