Crude oil rose after Venezuela's oil minister said he would meet Sunday with his counterparts from Mexico and Saudi Arabia to discuss oil prices and production.
The three countries, which first got together when prices plunged in 1998, were the driving force behind a series of oil production cuts that sent prices to 10-year highs by September 2000. OPEC members agreed earlier this week to reduce production starting Sept. 1 to prop up prices. Non-OPEC Mexico had already prepared to reduce exports.
"The announcement of the meeting sent prices higher," said Tim Evans, senior energy analyst at IFR Pegasus in New York. "It had an emotional effect, because there will be no new cuts. In 1998, the cooperation of Mexico helped OPEC engineer a rise in prices." Crude oil for September delivery rose US$0.29, or 1.1 percent, to US$27.02 a barrel on the New York Mercantile Exchange.
Prices are up 5.6 percent this week, and down about 4 percent from a year ago.
In London, Brent crude oil for September settlement rose US$0.05 to US$25.19 a barrel on the International Petroleum Exchange.
Venezuelan Energy and Mines Minister Alvaro Silva said he will meet with Saudi Oil Minister Ali al-Naimi and Mexican Energy Secretary Ernesto Martens in Geneva. The production cut announced this week by the Organization of Petroleum Exporting Countries will be its third of the year.
``We decided it's useful to analyze the market and strengthen relations with non-OPEC countries that share our philosophy of rationalizing the market,'' Silva said at a news conference. He said he hoped Russia, Norway, Oman, Angola and Kazakhstan would also cut their output.
OPEC's decision to reduce production came as lower-than-expected demand helped boost US inventories above year-ago levels and pushed prices to the bottom of OPEC's targeted price range.
Mexico said it would trim its exports by 70,000 barrels a day next month as part of OPEC's decision. The reduction, planned last month, will last until the end of November and cap sales abroad at 1.65 million barrels a day.
The three nations have consulted on oil policy since 1998, helping to lift prices from around US$10 a barrel in December of that year.
Gasoline for August fell US$0.061 to US$0.7575 a gallon on the Nymex. Prices rose 4.7 percent this week. Futures, which represent wholesale prices, are 17 percent lower than at this time last year.
Oil prices fell in early trading after a report that the US economy slowed in the second quarter signaled that there may be more than enough oil to meet demand. The economy grew at a 0.7 percent annual rate, the slowest pace since 1993, the Commerce Department said.
Weakening economies in the US, the EU and Japan this year will translate into the slowest growth in demand for oil since 1997-1998, the International Energy Agency said this month.
Japan, which consumes about 7.3 percent of the world supplies, said crude oil imports fell 3.8 percent in June from a year earlier, the third consecutive monthly decline.
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