World oil prices extended a rally today after a shock OPEC decision to tighten oil supplies that analysts said will put the heat under crude markets this winter.
US light crude rose 39 cents to $28.63 a barrel and London Brent added 47 cents to $27.14.
The gains came on top of a dollar-a-barrel surge yesterday after OPEC agreed to cut output to prevent a build in petroleum inventories during the fourth quarter.
"This is a powerful message from OPEC and unless we see significantly higher production from Iraq, which looks unlikely, prices are going up," said Mr Brian de Clare, head of global commodity marketing at ABN Amro.
"We could see it test $33 for Brent, $35 for U.S. crude."
The Organisation of the Petroleum Exporting Countries agreed to reduce production for 10 members by 900,000 barrels per day to 24.5 million bpd, effective November 1st.
It cited rising inventories, a fall in prices this month and the gradual return of Iraqi crude to the world market.
"We want to protect the $25 price," said OPEC President Mr Abdullah al-Attiyah of Qatar yesterday.
US oil had fallen $2 a barrel from early September but was still high enough to value an index of OPEC crudes near the middle of its $22-$28 price range.
OPEC was influenced by bullish forecasts from Iraq's new oil minister, attending Baghdad's first post-war OPEC meeting, for Iraq to overcome security problems and restore post-war output early next year.
Iraq so far has only been able to pump exports of a million barrels daily, less than half pre-war deliveries and has yet to resume supplies along its northern export pipeline.