Oil moves up as OPEC announces million barrel output cut

Mumbai: Crude prices rose more than a dollar to above $60 after producer group OPEC proposed to cut output by one million barrels per day to prop up sagging prices. US crude rose $1.35 to $60.76 while London Brent surged $1.44 to $60.66 a barrel.

World's top exporter Saudi Arabia will reduce production by 300,000 bpd as part of the plan, an OPEC delegate said. "The goal now is to cut actual oil production by one million barrels daily as soon as possible but the exact date is still being worked out," the delegate added.

All OPEC countries except exempted Iraq and net importer Indonesia are to take part in the supply curbs, the delegate said. Nigeria and Venezuela had led the move to cut back on production last weekend, with daily cuts of 120,000 and 50,000 barrels per day (See: OPEC members Nigeria, Venezuela to cut output) These two countries produce 3.8 and 2.5 million barrels per day.

The group has kept official output limit at 28 million bpd for over a year. The cutback will be OPEC's first since April 2004.

Oil has slid from a peak of $78.40 in July to $58 a barrel currently.

The production cuts have been pressured more by rising inventories in top consumer the US, say market analysts. US crude stocks rose 3.3 million barrels last week, the highest level since 1999. OPEC fears that more than the levelling of demand it is the high level of global fuel stockpiles that is affecting oil prices.