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Oil Rises for Third Day on OPEC Cut, Attack on Nigeria Facility
By Eduard Gismatullin
Dec. 15 (Bloomberg) -- Crude oil advanced for a third day in New York after OPEC agreed to trim production and Nigerian gunmen attacked a Royal Dutch Shell Plc facility.
OPEC, which pumps about 40 percent of the world's oil, will curb supplies by 500,000 barrels a day beginning Feb. 1, the second cut in three months. Gunmen attacked a Shell facility in the Niger Delta region, shutting down 12,000 barrels a day of crude production, the company said.
``The biggest concern price-wise is really always something that causes demand to collapse,'' said Mike Wittner, London-based global head of energy market research at Calyon, a unit of Credit Agricole SA. ``The big drivers of world demand are the U.S., China and the Middle East, and all of them are seen to be going strong.''
Crude oil for January delivery rose as much as 58 cents, or 0.9 percent, to $63.09 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract traded at $62.83 a barrel at 1:04 p.m. London time.
Nigerian militants are attacking facilities owned by international oil companies and demanding a greater share of the country's energy wealth. The unrest has halted output of as much as 700,000 barrels of oil a day this year in the nation, Africa's largest crude producer.
Brent crude oil for February settlement advanced as much as 62 cents, or 1 percent, to $63.51 a barrel on the London-based ICE Futures exchange. The contract traded at $63.18 at 1:05 p.m. London time.
The Organization of Petroleum Exporting Countries agreed in October to cut output from Nov. 1. The group has achieved about 80 percent of that 1.2 million barrel-a-day reduction, Saudi Arabian Oil Minister Ali al-Naimi said.
OPEC Compliance
OPEC cut its daily output in November by 550,000 barrels to 28.82 million barrels, the lowest since May 2004, according to a Bloomberg News survey of oil companies, producers and analysts. The group's production has fallen for four consecutive months.
Angola, Africa's fastest-growing oil producer, was yesterday accepted as the 12th member of OPEC, the first addition since 1975. The nation expects oil companies such as Total SA, Exxon Mobil Corp., Eni SpA and Chevron Corp. to reduce output when needed under the nation's OPEC agreements, Desiderio Costa, Angola's oil minister, said yesterday.
``On the surface, OPEC is adding a country, therefore their influence is bigger and the ability to control prices is more effective,'' Calyon's Wittner said. ``I wouldn't expect Angola to be one of the countries that actively cuts to support prices'' because so many foreign companies produce oil in the country.
Dollar Weakness
OPEC reduced production to try to prop up prices, which have fallen about 20 percent from a record high $78.40 a barrel on July 14 in New York. The decline of the U.S. dollar is also a concern, OPEC President Edmund Daukoru told reporters in Abuja, Nigeria yesterday.
Expressed in U.S. dollars, the price of U.S. benchmark crude, called West Texas Intermediate, has risen about 3 percent this year. The oil price has fallen about 7 percent this year expressed in euros, gained about 3 percent in yen and slid 10 percent in British pounds.
The purchasing power of OPEC nations that rely on oil sales priced in dollars for the majority of their foreign exchange earnings has fallen as the dollar weakens.
OPEC's basket price, a weighted average of 11 blends produced by OPEC nations, rose 43 cents to $57.43 a barrel yesterday.
``Unofficially, $60 a barrel is the price OPEC would like to maintain,'' Gundi Royle, head of Royle Energy Partners, said yesterday. ``It's very important that OPEC gives clear directions.''
Crude oil may hold near $62 a barrel in New York next week, according to fourteen of 42 analysts, traders and brokers, or 33 percent, surveyed by Bloomberg News. Fourteen forecast an increase and 14 predicted a decline. It's the first time since the survey began in April 2004 that responses have been evenly divided.
To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net
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