Oil rose more than 1 per cent and topped US$46 (Dh169) a barrel earlier today, as investors reacted to comments by Opec's group secretary general who told reporters in Doha this morning that it would cut its forecast for 2009 oil demand by one million barrels per day ahead of next week's meeting in Vienna. But nagging worries about the health of the global economy and its impact on world energy consumption caused oil prices to pare some of their early gains of more than 2 per cent.
US crude for April delivery rose 77 cents to $46.29 a barrel in early morning trading, after rising as much as $1.24. London Brent crude rose 40 cents to $45.25 a barrel. It was the first time since December 11, 2008 that NYMEX crude had gained a premium over Brent at the settlement. "In general, the market is still quite bullish that Opec is going to cut production of maybe between 0.5 million to one million barrels per day," said Clarence Chu, a trader at Hudson Capital Energy in Singapore. "But there's some degree of cautiousness on the amount Opec would be able to cut."
Opec will cut its 2009 oil demand forecast by one million barrels per day because of the global economic slowdown, Mr al Badri said, adding that although the current oil price was "not really acceptable" to the producer group, it was not as bad as it could be, given the state of the global economy. Mr al Badri had also said on Friday that low oil prices could provide economic stimulus in the short term, but at the cost of a supply shortfall in future due to low investment.