Oil Prices Gain from Likely Cut in OPEC Output

A04761749.jpgTEHRAN (FNA)- Oil prices jumped over $2 after OPEC refused to rule out further output cuts and China unveiled a massive $600 billion stimulus plan.

US light sweet crude for December delivery advanced $2.46 to $63.50 a barrel on Monday, while London Brent North Sea crude for December delivery surged $2.26 to $59.61.

On Sunday, China announced a $586 billion economic stimulus plan aimed at boosting its domestic economy. Dealers believe the move will increase demand for all commodities, including oil.

David Moore, a Sydney-based strategist with the Commonwealth Bank of Australia, said that the package ‘is significant’ and will increase demand for oil.

The Chinese thirst for oil imports, used to fuel the country’s runaway economic growth in recent years, was a key factor behind the surge in crude prices to record levels above $147 in July this year.

Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), Chakib Khelil, said on Sunday that the 13-member body would cut production should oil prices remain below the organization’s preferred range of $70 to $90 a barrel.

The International Energy Agency (IEA) in its latest report, World Energy Outlook, has hiked its long-term forecast for the price of a barrel of oil in 2030 to just over $200 in nominal terms, compared to last year’s estimate of $108 a barrel.

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