Oil rises on Opec rumours

19 February 2008

The price of heating oil and crude oil futures continued to rise on Tuesday amid speculation that Opec intends to cut output in the near future.

Reports from the Middle East in recent days suggest that the energy ministers of several leading Opec nations expect demand for oil products to fall as the northern hemisphere winter comes to an end.

As a result, they are rumoured to be planning to vote to reduce production at the next Opec meeting on March 5th.

The speculation was enough to keep upward pressure on prices and during early trading on Tuesday, heating oil futures reached $2.6789 (£1.3747) a gallon.

US crude was up 95 cents a barrel from its previous close at $96.45 a barrel and Brent crude was up 39 cents at $95.30.

The price rises may please the Opec nations, according to Tetsu Emori of Astmax who told Bloomberg the cartel's likely move towards cutting output is all about keeping prices high.

"They keep saying that the demand in the second quarter will fall further so they need to make a production cut. They don't care about the supply and demand balance,'' claimed Mr Emori.

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