Oil rises 2 pct to above $36 after UAE cuts supplies
Oil climbed above $36 a barrel on Friday, after the UAE joined Saudi Arabia in deepening oil supply curbs to comply with OPEC's biggest-ever output cut last week, telling refiners it would stiffen shipping limits on exports of its main grades, reported Reuters.
Crude for February delivery was trading up 85 cents at $36.20 a barrel by 10:13 p.m. ET, after rising more than $1 to as high as $36.37 earlier. It settled down 9.3 percent, or $3.63, on Wednesday, not far off the more than 4- year low struck a week ago.
London Brent crude was up 64 cents at $37.25. Markets were closed on Thursday for Christmas Day.
Oil prices have dropped about $110 a barrel since their mid-July peak as the global financial crisis chipped away at fuel demand, spurring OPEC producers to cut 5 percent of global oil production to stem the slide.
The Abu Dhabi National Oil Co (ADNOC), the main producer in the United Arab Emirates, the world's fifth-largest oil exporter, will continue to supply its customers of flagship Murban crude with 15 percent less than normal contractual supplies in January, while Upper Zakum supplies will be reduced by 3 percent from the norm.
ADNOC said it will reduce supplies of all four crude grades for February, the deepest supply cuts since it started cutting allocations in November.
A source with an Asian refiner said the ADNOC cuts were more than expected.
"ADNOC had already allocated January volumes, but they reversed the decision, so that messes up our schedule," the source said. "For February, the reduction volumes are very large, so we may need to adjust our ship loadings."
Analysts and refiners said the notice was hard evidence that one of OPEC's core members was implementing its share of the group's agreed 2.2 million barrel per day (bpd) production cut, giving relief to an oil price that had been undermined by worries about adherence to OPEC's cuts.
OPEC may call an emergency meeting before March if prices extend their slide, President Chakib Khelil said on Tuesday.
Oil tumbled on Wednesday on news that U.S. jobless claims had risen to a 26-year high and consumers had cut spending for the fifth consecutive month in November, reinforcing expectations of a prolonged slowdown in energy consumption.
A U.S. Energy Information Administration report on Wednesday showed crude inventories dropped 3.1 million barrels last week, countering expectations of a 400,000 barrel rise, but dealers said larger-than-expected builds in U.S. refined fuel supplies last week kept the outlook bearish.
Japan's deepening recession is expected to cut oil demand in the world's third-biggest oil consumer by 4.7 percent in the year starting in April, after sliding 5.7 percent in the fiscal year ending next March, the Institute of Energy Economics (IEE), Japan, said in its annual outlook this week.
In yet another sign that lacklustre demand was hurting, a company source from China offshore oil specialist CNOOC Ltd (0883.HK) said the firm was likely to scale down or delay some projects as slumping oil prices threatened to invalidate its previous oil economics.
Reliance Industries on Thursday began processing crude oil at a new 580,000-bpd refinery in western India, which would make it the world's single biggest supplier of fuels to the global market just as global oil demand retreats.
While the new refinery's low cost and global reach mean it should turn a profit by crowding out less efficient export-oriented rivals in Europe or Asia, trade and industry sources said that for tax reasons the new plant was not expected to begin significant exports until April.