U.S. Oil Prices March Forward

U.S. oil prices resumed their upward climb on Monday, egged on by word from OPEC that the cartel had a consensus to slash output output by next week, Reuters reported By early afternoon, crude oil for February delivery on the New York Mercantile Exchange was trading at $28.30 a barrel, a 35-cent rise, taking total gains in the last six trading sessions to $2.50 a barrel, or ten percent. A statement by OPEC Secretary-General Ali Rodriguez on Sunday spurred the day's advance. Rodriguez, the former energy minister of Venezuela said on Sunday that the 11-member producers' cartel had a consensus to cut crude oil supplies but had not decided by how much. "For the time being there is a consensus to cut but how much we don't know," Rodriguez said. Rodriguez's remarks came after the former Venezuelan energy minister met with departing U.S. Energy Secretary Richardson in Vienna. Richardson, in probably his last mission for the Clinton Administration, which bows out next week, warned against what he called precipitous action to cut output. "We would like to see no production cuts but we recognize that there are realities," he said. OPEC convenes its ministerial meeting to assess market conditions on January 17. Many cartel members have recently pressed for cartel action to curb production to prevent prices from sliding, as world demand is expected to fall in the second quarter. Despite Rodriguez' silence on OPEC's possible reduction volume, Kuwaiti Oil Minister Sheikh Saud Nasser al-Sabah had said on Saturday he understood from Rodriguez there already was a cartel consensus for a cut of between 1.5-2.0 million barrels per day (bpd). Price hawk Kuwait favors the higher figure. Strong backing for slashing OPEC output by at least two million came from Mideast producer Qatar on Monday. Qatari Oil Minister Abdullah bin Hamad al-Attiyah reasoned that the bigger cut would be "more effective in guaranteeing that prices remain within the $22-$28 range set by OPEC."