Oil prices rebounded yesterday on fresh violence in Iraq ahead of elections this month and as Saudi Arabia, OPEC's top producer, said it has followed through with a pledge to cut output.
US crude rose $1.53 to $43.65 a barrel on the New York Mercantile Exchange. Crude had started the year on Monday with a $1.33 drop due to continued mild weather in the US Northeast, the world's biggest regional consumer of heating oil.
London's Brent crude rose 33 cents to $40.79 a barrel. London's International Petroleum Exchange was closed on Monday for a holiday.
Gunmen killed Baghdad's governor, Mr Ali al-Haidri, in a roadside ambush yesterday, in Iraq's highest-profile assassination in eight months of an escalating campaign to wreck the January 30th elections. A suicide bomber also killed 11 people at a police checkpoint.
The move by Saudi authorities to cut output also weighed on sentiment. OPEC producers have pledged to cut a million barrels per day (bpd) of excess production to stop inventories building too quickly.
Saudi Arabia had enforced its pledge to cut 500,000 bpd of supply and was now producing around nine million bpd, Saudi Oil Minister Mr Ali al-Naimi said yesterday.
"We took off the 500, we're around nine," Mr Naimi said on arrival for a meeting with Asian oil consumers in New Delhi.
A succession of supply hitches has also supported prices.
Iraq's northern exports through Turkey have been stopped since mid-December, following sabotage on the Kirkuk-Ceyhan pipeline, which can carry 500,000 bpd.
Oil officials said security forces had foiled an attack on Sunday on a refinery near the oil exporting city of Basra, where exports were running at about 1.6 million bpd.
In Nigeria, a company source for Royal Dutch/Shell said the company had ended a dispute with a Nigerian community and that 100,000 bpd of production that was halted during the dispute should resume flowing on Wednesday.
About 145,000 bpd of crude output remains closed in the US Gulf of Mexico following September's Hurricane Ivan. Two oil fields with combined production of 205,000 bpd are still closed in the Norwegian North Sea after a gas leak in November.
Oil fell on Monday on warmer than usual US weather. Private forecaster Meteorlogix predicted temperatures in the US Northeast to be above normal until Thursday and for near to above usual levels for the six-to-10-day basis.
US crude prices are down more than $12 from an all-time peak of $55.67 a barrel in late October amid signs that higher fuel costs are beginning to weigh on global economic growth. - (Reuters)
