Oil prices to rise ahead of impending production cuts

15 December 2008

Oil prices are expected to rise in anticipation of Opec announcing cuts to production when it meets this Wednesday.

The meeting of the oil cartel in Algeria on the 17th is likely to see members agree that a reduced output is necessary to boost slumping prices.

Speaking to Reuters, Ken Hasegawa, a commodity derivatives sales manager at Tokyo broker Newedge, said: "Opec's bullish comments on supply cuts, such as two million barrels per day is supporting the price."

He added that oil prices are also getting support from the dollar's weakness against the euro which is currently at a two-month high.

Meanwhile, home heating oil customers will benefit for as long as oil prices remain low ahead of production cuts.

A barrel of US crude currently stands at $46.09 (£30.64) and Brent at $45.97 per barrel - prices which are still significantly lower than they were in the summer when they reached record highs of $147.

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