AFP, SINGAPORE
World oil prices were higher in Asian trade yesterday after OPEC refused to rule out further output cuts and China’s massive stimulus package aimed at boosting domestic spending, dealers said.
New York’s main contract, light sweet crude for December delivery, advanced US$2.52 to US$63.56. Brent North Sea crude for December delivery rose US$2.62 to US$59.97.
China’s 4 trillion yuan (US$590 billion) stimulus package aimed at boosting its economy will mean increased demand for commodities including oil, dealers said.
“China’s stimulus package is significant,” said David Moore, a Sydney-based strategist with the Commonwealth Bank of Australia.
“It will support China’s economic growth and therefore demand for oil,” he said.
The Asian giant is a major buyer of commodities and its thirst for oil imports to fuel its runaway economic growth in recent years was a key factor behind the surge in crude prices to record levels above US$147 in July.
China’s stimulus package, decided at a recent meeting chaired by Chinese Premier Wen Jiabao (溫家寶), calls for tax cuts and increased spending corresponding to about 7 percent of the country’s GDP over the next two years.
The package comes amid rapidly worsening predictions for the impact of the financial turmoil on China’s export-dependent economy.
Meanwhile, OPEC president Chakib Khelil indicated over the weekend another round of production cuts may be on the cards if oil prices remained below the cartel’s preferred range of US$70 to US$90 a barrel.
“We have always said that our objective is US$70 to US$90 a barrel,” Khelil, who is also Algeria’s energy minister, said on Saturday at an energy industry seminar in Algiers.
“If the barrel price does not reach this level, there will probably be another [production] cutback,” he said, adding however, that there must be consensus among all OPEC countries “and everyone has their own interests.”
OPEC, which pumps 40 percent of the world’s crude, announced last month in an emergency meeting its daily output will be cut by 1.5 million barrels to 27.3 million barrels from this month onwards.
The production cuts were aimed at shoring up prices which had fallen sharply from July’s highs on fears energy demand would be hit by slowing economic growth.
OPEC’s next meeting is scheduled to take place in Oran, Algeria, on Dec. 17.
Before that, OPEC’s Arab members will meet in Cairo on Nov. 29, Khelil said.
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