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.