Prices inch higher in response to news of a surprise OPEC decision to cut oil output limits.
February 10, 2004: 11:34 AM EST
LONDON (Reuters) - Oil prices rose on Tuesday after an OPEC delegate said the cartel plans to slice a million barrels per day from official output limits from the start of April, and clamp down on leakage.
London's Brent crude leapt 74 cents to $29.85 a barrel on news of the surprise cut, while light crude for March delivery jumped 64 cents to $33.47 on the New York Mercantile Exchange.
"The markets discounted the cut for the whole of last week, and they are going to start moving up from here," said Man Energy analyst Edward Meir.
But he added that upside potential was somewhat limited. "There is not really that much to go on," he said, noting prices were still near the top of their $6-a-barrel winter rally.
An Organization of Petroleum Exporting Countries delegate said the cartel had agreed to cut official output limits by one million barrels per day, effective April 1, aiming to prevent a price slump as winter fuel demand wanes. OPEC is scheduled to meet again on March 31.
The cut would bring output limits to 23.5 million barrels per day.
An OPEC official added that the group had also agreed to immediately eliminate 1.5 million barrels a day of quota busting now being pumped above existing supply quotas.
The cartel has been flouting self-imposed production limits to contain a winter price spike.
A Reuters survey last week estimated OPEC members, excluding Iraq, had been producing more than 1.75 million barrels per day over and above the official output ceiling to contain a winter price spike.
Ministers were widely expected to leave official production curbs unchanged but crack down on leakage above those limits.
Prices have gained more than 20 percent since OPEC last announced a cut in production in September, and on Tuesday the cartel's reference basket of crudes was valued above its preferred $22-28 price band.
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