Oil price renews upward trend

Opec fears a sharp drop in prices next year

Oil prices renewed their price rise on Tuesday, after a warning by leading crude producers that they may cut output..

The price of oil, as measured in benchmark Nymex futures, gained a further $0.18 to $34.65 a barrel in afternoon trading in Singapore.

Nymex futures gained $0.45 on Monday in New York.

The rise followed a meeting on Monday of the Organisation of Petroleum Exporting Countries (Opec), which, while rubber-stamping an agreement to raise production this year, warned of output cuts in 2001.

Members of Opec, which has said it wants crude prices to remain between $22-$28 per barrel, said production may be cut to prevent a glut in the oil market next year.

Opec's outgoing secretary-general, Rilwanu Lukman, said:

"The market is getting perhaps a little saturated and, as stocks build up, it is likely to hit us in the face later in the New Year if we don't watch it."

'Reliable' supplier

But Opec president Ali Rodriguez, of Venezuela, denied the warning prompted the latest rise in oil prices.

"Opec has more than fulfilled its role as a reliable oil supplier," he said. "The true reasons for the currently high prices lie behind a series of other factors."

By the time Opec next meets, on January 17, analysts expect oil importers to have rebuilt stockpiles opened as the price of crude rose to 10-year highs this summer.

"The level of crude oil supplies will exceed the level of demand, leading directionally to a stockbuild, in contrast to what would normally be a stockdraw this time of the year," said John Russel, of Bangkok-based Petroleum Economics.

Reserves typically fall when winter hits the northern hemisphere, where most of the world's population, and industry, is based.