Oil rises after surprise OPEC output cut
Oil rose on Wednesday following a surprise decision by OPEC to cut production, after slowing demand from the United States and other large consumers sent prices down 30 percent over the past two months.
British Chambers of Commerce calls for rate cutThe Organization of the Petroleum Exporting Countries (OPEC) said it had agreed to revise its output targets to 28.8 million barrels per day (bpd), which the group's president said effectively meant reducing supply by about 520,000 bpd versus July over the next 40 days.
"Since the market is over-supplied, the conference agreed to abide by September 2007 production allocations (adjusted to include new members Angola and Ecuador and excluding Indonesia and Iraq), totalling 28.8 million bpd," the group said in a communique.
Most analysts had expected the group to maintain formal targets.
U.S. crude rose 68 cents to $103.94 a barrel by 10:17 a.m. On Tuesday, it fell to as low as $101.74, the cheapest price in five months.
London Brent crude rose 77 cents to $101.11, after falling below $100 on Tuesday for the first time since April.
"We think this is a serious deal for a real cut...In this market, direction matters and this is a turn," UBS economist Jan Stuart said in a report.
However, the gains in prices were limited as the International Energy Agency (IEA) lowered its 2008 world oil demand growth forecast by 100,000 bpd due to the impact of weaker economic conditions and high prices in its monthly oil market report.
The IEA, adviser to 27 industrialized countries on energy policy, also trimmed its forecast for 2009 global demand growth by 40,000 bpd to 890,000 bpd.
Traders would shift their focus to the U.S. weekly oil statistics due out later on Wednesday for market direction.
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