OIL rose US$1 to over US$92 a barrel yesterday as expectations the US Federal Reserve would cut interest rates again this week and OPEC would maintain output cuts offset concerns of a potential US recession.
Crude added to gains from the previous three sessions as bullish sentiment returned after the US government last week unveiled a plan to stimulate the economy and the Federal Reserve made a three-quarter-point emergency rate cut.
US crude traded up US$1.08 to US$92.07 at 2135 GMT, after settling earlier up 65 cents to US$91.64 a barrel.
London Brent crude settled up 62 cents at US$92.00 a barrel, adding to its recent premium to US oil.
Fears the subprime mortgage crisis could tip the US economy into recession and dampen oil demand knocked crude off a record high above US$100 hit on Jan. 3.
Many analysts expect the Fed will reduce interest rates again this week after last week's cut.
US economic data released yesterday were mixed, with stronger-than-expected orders for US-made durable goods in December countering a record fall in house prices in November.
Expectations OPEC will leave production levels unchanged when it meets this week in Vienna despite calls from the United States and other consumers for the cartel to open the taps to bring down prices have also supported prices.
"The economic durable goods report was bullish for equities and seemed to support (oil) as well," said Tom Bentz of BNP Paribas Commodity Futures Inc.
"(OPEC members) are not going to be raising any output, it looks like it is going to be a rollover," he said, adding: "The expected interest rate cut has been supportive as well."
STEADY OPEC
Ecuador's oil minister said yesterday oil supplies to international markets were adequate and there was no need for OPEC to change output at its meeting in Vienna on Friday.
"We believe that oil production levels are adequate," Ecuador's Galo Chiriboga told Reuters. When asked if the group needed to change output, he replied "No."
US Energy Secretary Sam Bodman reiterated calls for OPEC to increase output to help rebuild global inventories.
"I think that some increase in supply is warranted," Bodman told reporters, adding a boost in OPEC production may lower oil prices. "That would help our economy."
Iran Oil Minister Gholamhossein Nozari told an Iranian newspaper "there was no need to supply more oil as the market was supplied sufficiently and its conditions were stable."
The downturn in the US economy has shaken some speculative investors out of oil markets, experts say. Speculators, blamed by OPEC for sending prices into triple digits at the start of the year, slashed bets US crude prices would rise last week, according to a government report.
Oil also rose after news output the giant Cantarell oil field in Mexico, one of the top suppliers to the United States was expected to fall this year by 200,000 barrels per day (bpd). Production at the field was running at around 1.26 million bpd in December.
A Reuters poll of analysts ahead of weekly US government inventory data forecast a 2.4 million barrel rise in crude stocks, a 1.9-million-barrel build in gasoline stockpiles and a 1.7-million-barrel distillate draw.