Crude oil rose for the first time in a week on expectations that an OPEC committee, which met today, would recommend that the producers cut output for the fourth time this year.
OPEC is facing the smallest increase in oil demand in 17 years because of a slowing global economy. Committee members said a cut was one option, though they wouldn't say what tactic they would recommend to the full group. OPEC's benchmark price is down 30 percent since the Sept. 11 terrorist attacks on the US.
"A production cut is the only way we are going to get a sustained rise in crude oil prices," said Ed Silliere, vice president of risk management at Energy Merchant LLC. "They're in a really tough situation right now."
Crude oil for November delivery rose US$0.52, or 2.4 percent, to US$21.83 a barrel on the New York Mercantile Exchange.
Prices are down 3 percent this week and 20 percent since Sept. 11. Oil on Friday fell to its lowest closing price since October 1999. In London, Brent crude oil for December settlement rose US$0.73, or 3.5 percent, to US$21.35 a barrel on the International Petroleum Exchange. Brent also closed at a two-year low yesterday.
The 10 OPEC members that have production quotas, all except Iraq, have already reduced their targets this year by 3.5 million barrels a day, or 13 percent, in an effort to prop up prices.
OPEC has an informal agreement to consider another output cut if the OPEC basket stays below US$22 a barrel for 10 days. Yesterday's price of US$18.54 was the lowest since July 22, 1999, and marked the 19th day that the index was below US$22.
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