Oil prices rise on OPEC talks

Oil prices rose yesterday, supported by reports that OPEC oil ministers have begun talks on another potential cut had worries about energy short ages in parts of Europe.

Light, sweet crude for February delivery rose 82 cents to $57.13 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. Brent crude for February rebounded by $1.01 to $56.65 a barrel on the ICE Futures exchange.

The rebound which came after last week's plunge amid a warmer-than-normal winter in the U.S. Northeast, a key region for heating oil demand strengthened amid reports that Belarus had had ordered a halt to deliveries of Russian oil that goes via its territory to Germany, Poland and Ukraine.

Countries in the European Union, which depends on Russia for 25 per cent of its gas consumption, suffered a brief disruption in early 2006 after Moscow suspended gas deliveries to Ukraine because of a pricing dispute. Ukraine and Belarus are the transit route for Russian gas to Europe.

OPEC anxiety over recent declines in prices also appeared to be affecting prices, with Vienna's PVM Oil Associates saying the market's recovery was partly due to “reports that OPEC might hold an extraordinary meeting prior to its scheduled meeting on March 15”.

Citing a senior OPEC source, Dow Jones Newswires also reported yesterday that members of the Organisation of petroleum Exporting Countries have been talks on the potential need for a further output cut in response to a 10 percent drop in oil prices since the beginning of the year.

OPEC had no immediate comment.

“OPEC almost has to do something here, and that is something we need to be ready for” said Peter Beutel at Cameron Hanover.

The oil cartel agreed t o a 1.2 million
Barrel-a-day cut in crude output beginning in November and another 500,000 barrel-a-day cut set to begin February 1.