Oil prices gained yesterday after OPEC decided to cut output by a greater-than-expected 1.2 million barrels a day to reverse a three-month price slide. Some mem-bers indicated the cartel was open to further reductions.
Light, sweet crude for delivery next month rose US$0.40 to US$58.90 a barrel in Asian electronic trading on the New York Mercantile Exchange.
The futures contract, which was to expire yesterday, rose US$0.85 to settle at US$58.50 a barrel on Thursday.
The contract for December, which moves to the front month from Monday, was up US$0.31 at US$60.81 a barrel after touching a high of US$61.34.
December Brent crude on London's ICE Futures exchange rose US$0.33 to US$61.20 a barrel.
The cut, which is slightly above the market's predictions, will take effect on Nov. 1, just as global oil demand will begin to rise on the back of the Northern Hemisphere winter.
"This was a surprise, and gave the market an impression they are serious," said Ken Hasegawa, a broker at Himawari CX in Tokyo.
The move yesterday by OPEC countries follows a more than 25 percent decline in oil prices since a mid-July peak of above US$78 a barrel and would be the first cut since December 2004, when oil traded slightly above US$40 a barrel.
United Arab Emirates Oil Minister Mohammed bin Dhaen al-Hamili made the announcement at a news conference after OPEC's oil ministers held an emergency meeting in Doha.
Al-Hamili did not specify the amount of production that each member country would cut, but said the reductions will affect all countries except Iraq.
The cuts will come from actual production levels, he said, and are more than the 1 million barrels a day being called for earlier by cartel members.
OPEC is currently producing about 29.5 million barrels of oil per day.
Some analysts said the cut would have limited impact on global energy supplies, which have been rising.
"Crude oil inventories in the OECD [Organization for Economic Cooperation and Development] countries are at their highest levels for the last five years. If OPEC continues to cut production for three months, for example, there won't be much impact," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.
Oil prices have slumped since July due to rising inventories, a weaker-than-anticipated hurricane season and expectations for slower global growth.
In other Nymex prices, heating oil rose US$0.35 to US$1.7236 a gallon (3.8 liters), while gasoline gained US$0.126 to US$1.502 a gallon. Natural gas fell US$0.029 to US$7.103 per 1,000 cubic feet (28.3m3).