Oil rises ahead of Opec meet

17/12/2008

The price of crude oil has risen today (December 17th) as investors anticipate that the Organisation of the Petroleum Exporting Countries (Opec) will cut production by two million barrels a day.

On the New York Mercantile Exchange, light, sweet crude for January delivery gained as much $1.15 (74p), rising to $44.75 a barrel.

Robert Laughlin, a senior broker at MF Global, told Bloomberg that a large cut would be needed to boost prices.

A cut in crude oil production could also increase the price of heating oil, DERV and other distillates.

"The reality is that we need a cut of at least 1.5 million barrels a day along with positive rhetoric from ministers that they will continue to monitor the global demand scenario," said Mr Laughlin.

In October, Opec enforced a cut of 1.5 million barrels a day, but held back on further cuts in November amid concerns that the earlier supply restriction was not being adhered to by some member states.