World oil prices were higher in Asian trade today after Opec refused to rule out further output cuts and China's massive stimulus package aimed at boosting domestic spending, dealers said. New York's main contract, light sweet crude for December delivery, advanced $2.52 to $63.56. Brent North Sea crude for December delivery rose $2.62 to $59.97. China's ¥4 trillion (Dh2.1 trillion) stimulus package aimed at boosting its economy will mean increased demand for commodities including oil, dealers said.
"China's stimulus package is significant," said David Moore, a Sydney-based strategist with the Commonwealth Bank of Australia. "It will support China's economic growth and therefore demand for oil," he said. The giant Asian nation is a major buyer of commodities and its thirst for oil imports to fuel its runaway economic growth in recent years was a key factor behind the surge in crude prices to record levels above $147 in July.
China's stimulus package, decided at a recent meeting chaired by the premier Wen Jiabao, calls for tax cuts and increased spending corresponding to about seven per cent of the country's gross domestic product over the next two years. The package comes amid rapidly worsening predictions for the impact of the financial turmoil on China's export-dependent economy. Meanwhile, the Opec president Chakib Khelil indicated over the weekend another round of production cuts may be on the cards if oil prices remained below the cartel's preferred range of $70 to $90 a barrel.
"We have always said that our objective is $70 to $90 a barrel," Mr Khelil, who is also Algeria's energy minister, said Saturday at an energy industry seminar in Algiers. "If the barrel price does not reach this level, there will probably be another [production] cutback," he said, adding however that there must be consensus among all Opec nations, "and everyone has their own interests." The Organisation of the Petroleum Exporting Countries (Opec), which pumps 40 per cent of the world's crude, announced in October in an emergency meeting its daily output will be cut by 1.5 million barrels to 27.3 million barrels from November onwards.
The production cuts were aimed at shoring up prices which had fallen sharply from July's highs on fears energy demand would be hit by slowing economic growth. Opec's next meeting is scheduled to take place in Oran, Algeria, on Dec 17. Before that, Opec's Arab members will meet in Cairo on Nov 29. *AFP
