Oil Settles at $71.85, Up $2, On Expected OPEC Cut

Oil futures settled at $71.85 per barrel, up $2, on Nymex trading Friday, spurred by a broader rise across financial markets and expectations OPEC could cut output at an emergency meeting next week.

U.S. stocks gained slightly in skittish trade, with the Nasdaq briefly rising 1 percent as investors hunted for beaten-down shares, offsetting mounting concerns about a possible global recession.

AP

U.S. crude had risen $2.22 to $72.07 a barrel by 12:23 p.m. EDT, a session after after it touched $68.57, the lowest level since June last year.

London Brent crude gained $1.60 to $69.44, while U.S. light, sweet crude also rose for November delivery.

It touched a low of $68.57 on Thursday, its lowest since June last year.

"The market is up in line with other asset classes,'' said Thomas Stenvoll at UBS.

"Oil is dependent on strength in the economy but in order to have a sustainable rally we need to have proof that it has really improved or at least it is not collapsing,'' he said. ``And right now we are not getting that proof.''

U.S. consumer confidence suffered its steepest monthly drop on record in October and construction starts on new homes fell to a 17-1/2 year low the previous month, while markets awaited a meeting between U.S. President George W. Bush and European leaders.

The financial crisis and high fuel prices earlier this year have eroded demand growth in the United States and other big consumer nations, sending oil in a tailspin from a record over $147 a barrel.

Analysts said oil traders were betting also that the Organization of the Petroleum Exporting Countries (OPEC) will reduce supply to support prices.

The producer group has brought forward an emergency meeting to October 24 from November 18 to discuss the impact of global recession on oil markets.

"It seems very likely that they will agree to cut production by a million barrels per day, although compliance could actually become an issue after this round of cuts or shortly thereafter, if history serves as any guide,'' Peter Beutel, analyst at Cameron Hanover,
wrote in a research note.

Qatar's Oil Minister Abdullah al-Attiyah said he expected OPEC to cut oil production by 1 million barrels per day (bpd) or more at the meeting.

Nigerian Oil Minister Odein Ajumogobia said the meeting was an opportunity to consider options regarding the world oil price but that no course of action had been proposed yet.

Oil prices have fallen more than 50 percent from their peak above $147 a barrel hit just three months ago, depressed partly by falls in demand in the United States and other industrial countries as the credit crisis has hit the wider economy.

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