Oil soars 11pc ahead of OPEC meetingGregory Meyer | March 13,...

Oil soars 11pc ahead of OPEC meeting
Gregory Meyer | March 13, 2009. Article from: Dow Jones Newswires

OIL soared in the latest bout of whipsaw trading as the market fretted over the outcome of an upcoming meeting of the OPEC cartel.

Light, sweet crude for April delivery settled $US4.70, or 11.1 per cent, higher at $US47.03 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures exchange settled up $US3.69 at $US45.09 a barrel.

Crude futures have zigzagged, with daily price changes of more than 5 per cent occurring 19 times this year on the Nymex. For all the volatility, prices have swirled near $US40 for months.

The Organisation of Petroleum Exporting Countries meets this Sunday.

The cartel announced cuts totalling 4.2 million barrels a day last year, efforts that helped a falling market bottom out. With prices still below the comfort level of many members, however, it's unclear whether OPEC will decide to cut more.

"It's been fairly dicey to predict OPEC meetings. They cultivate the art of surprise to some extent," said Antoine Halff, deputy head of research at brokerage Newedge USA in New York.

KEY COMMODITY PRICES: oil, gold, base metals, livestock and wheat

Crude has plunged more than $US100 a barrel from its highs last July, squeezing oil exporters' budgets. OPEC member Venezuela will urge a cut to prop up prices, said Angel Rodriguez, chief of the parliament's energy commission, according to Agence France-Presse.

"Venezuela has been saying it agrees with a new output cut, because oil reserves in consumer countries are high and need to be lowered so we don't repeat a delicate situation with regards to sagging prices," Mr Rodriguez said.

Libya's oil minister said the oil market is oversupplied and will go along if OPEC agrees to an output cut.
In Russia, the largest producer outside OPEC, Deputy Prime Minister Igor Sechin said the country supports cuts to oil deliveries, "and Russia will participate in this work," according to Russian news agencies. Russia has in recent months co-ordinated production cuts with OPEC, and Mr Sechin is due to attend the OPEC meeting in Vienna.

Other OPEC members are thought to favour no change to current quotas. Saudi-owned newspaper Al Hayat reported earlier this week the kingdom wants OPEC countries to show more compliance with previous reductions rather than institute a new cut.

"Shipments are still going down, but it's far from a straight line. Compliance is still an issue," said Roy Mason, head of tanker tracker Oil Movements.
His company said exports from OPEC countries, excluding Angola and Ecuador, are likely to fall by 350,000 barrels a day in the four weeks to March 28 as signs of the cartel's supply-tightening emerge.

Recent price swings come as producers and traders sort out the economy's impacts on demand. The latest data released showed new claims for US unemployment benefits rebounded last week, while total claims hit a record high.

In Germany, industrial production in January declined the most since the country's reunification in 1990, the economics ministry said.

"You're seeing these incredible percentage changes" in prices, said Brad Samples, an analyst at Summit Energy in Louisville, Kentucky