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Sun, Oct 15, 2006 - Page 10 News List

Oil prices edge up as Norway chokes offshore platforms

AP , WASHINGTON

A woman from a Chinese ethnic minority selling spices walks past an electricity pylon on the outskirts of Beijing on Thursday. China has decided to increase investment in bio-energy and other alternative energy projects in an effort to ensure the country's security against fears that increasing world oil prices will hurt its economic growth, China's Ministry of Finance said.

PHOTO: EPA

Oil prices rose on Friday after Norway ordered production shut down at two offshore platforms, reducing flows by about 10 percent from the world's third-largest oil exporter.

A decline in US inventories of distillate, which includes heating oil, also played a part in the rally, and traders continued to watch OPEC for any sign that the cartel will cut output.

Saudi Arabia -- the largest producer in OPEC -- has yet to publicly confirm repeated statements from OPEC's president that members are "nearing consensus" on how to divvy up a 1 million-barrel-a-day reduction.

Venezuela's oil minister said on Friday that there was growing consensus within OPEC to cut crude output by 1 million barrels starting Dec. 1 to help shore up world prices.

"There's a proposal now to cut 1 million barrels a day," Oil Minister Rafael Ramirez said in an interview with state television. "There is already consensus, which means the ministers agree on this. We call each other constantly, the minister of Iran, the minister of Qatar, the minister of Algeria, the secretary-general of OPEC, and there is already an agreement to do it."

Light sweet crude for November delivery on the New York Mercantile Exchange gained US$0.71 to settle at US$58.57 a barrel. In London, November Brent crude on the ICE Futures exchange rose US$0.76 to settle at US$59.73 a barrel.

Since a July peak above US$78, the cost of crude has dropped more than 25 percent amid rising global inventories, concerns about slowing economic growth and a milder-than-anticipated hurricane season.

Prices have stabilized around the US$60-a-barrel level amid expectations that OPEC will try to prevent further sharp declines by trimming its output.

The group is scheduled to meet in December in Nigeria, though some members are calling for an emergency meeting before then.

"Oil prices may be down, but are likely not out," Wachovia economist Jason Schenker said in a research note.

Norwegian safety officials on Friday upheld an order to shut down two offshore oil platforms because of defects in their lifeboat systems. The order will delay production of about 280,000 barrels per day of oil from Norway's average daily production of about 2.7 million barrels of crude oil, light oil and natural gas liquids.

The state Petroleum Safety Authority on Thursday rejected applications for dispensations from lifeboat rules for Statoil ASA's Snorre A platform and Norske Shell ASA's Draugen platform, and said that amounted to an order to shut down.

On Thursday, the US Energy Information Administration said domestic inventories of distillates, which include heating oil and diesel, fell by 1.6 million barrels to 149.9 million barrels for the week ending Oct. 6, due primarily to a decline in refinery operation.

The drop in distillates was comprised almost entirely of falling heating oil inventories, which saw their largest decline since the week ending March 24.

Heating oil futures gained more than US$0.03 to settle at US$1.7178 a gallon (US$0.4538 per liter), while gasoline futures rose US$0.0175 to settle at US$1.4684 a gallon. Natural gas prices fell US$0.123 to settle at US$5.659 per 1,000 cubic feet (US$0.1998 per cubic meter).

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