Oil sails higher as OPEC squeezes Asian supplies

Oil sails higher as OPEC squeezes Asian supplies

SINGAPORE (Reuters): Oil prices climbed to fresh highs in Asia on Thursday as concrete evidence emerged that oil producers were implementing plans to cut world supplies by two million barrels per day, traders said.

Saudi Arabia, the world's biggest oil exporter, issued notices to Japanese and South Korean customers that April supplies will be cut, Asian oil traders said.

May Brent crude futures on the Singapore International Monetary Exchange (SIMEX) climbed 17 cents to a four-month high of US$13.44 per barrel.

New York Mercantile Exchange (NYMEX) April crude futures rose 25 cents to $15.30 per barrel, matching a five-month high. By 0730 GMT, the contract was last traded at $15.25, just off the high.

"The market has been swept up in light volume," Matt Sims, a broker with ED&F Man said. "The fact that producers are already cutting back exports to Asia has got to be the news driving it."

Markets were spurred more than four percent higher overnight after several producers said they would start telling customers of cutbacks following last week's meeting at The Hague where they agreed to cut supply.

The first concrete evidence of the cuts emerged in Asia earlier on Thursday, with Japanese traders saying they had received notices that their import requirements for April would be cut 11-12 percent.

South Korean refineries were told by the kingdom that supplies in April would be cut 6-9 percent and Taiwan was told cuts would total around six percent.

Brent averaged just $13.34 per barrel last year, the lowest in more than 20 years, and OPEC lost more than US$50 billion in revenues owing to the slump in prices.

In October 1996, Brent had sailed to more than $25 per barrel.

The Organization of Petroleum Exporting Countries is looking to ratify the Hague deal at its Vienna meeting next week.