25 Nov 2008

Oil leaps 9% supported by OPEC statement

1:47 pm on 25 November 2008

Oil surged 9% to over $US54 a barrel on Monday on expectations that OPEC will cut output again and as stock markets rallied over the US government's plan to rescue US bank Citigroup.

OPEC President Chakib Khelil said a further output cut of more than one million barrels per day would be necessary to support the the oil market in its current state.

US crude for January delivery soared by $US4.57 to close at $US54.22 a barrel on the New York Mercantile Exchange.

In London, Brent North Sea crude for January rallied $US4.74 to settle at $US53.93.

OPEC oil ministers meet for informal talks in Cairo on 29 November though a cut is not expected to be announced until the next full policy meeting in December.

Some OPEC members have called for a further cut in output after a previous cut on 1 November failed to curb oil's steep drop from record highs over $US147 a barrel in July.

Venezuela said on Sunday OPEC should cut supply further. Iran made similar remarks on Monday.

US stocks extended gains on Monday as investors reacted to Washington's decision to pump $US20 billion into Citigroup, and as President-elect Barack Obama announced his economic leadership team to help dig the United States out of the worse economic crisis in 80 years.