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Oil nears $80 on possible Opec cut, strong US data

LONDON — Brent crude oil rose towards $80 a barrel on Friday on speculation Organisation of Petroleum Exporting Countries (Opec) could agree output cuts at a meeting next week, with strong US economic data also bolstering prices.

Venezuela reiterated its call for production cuts, with Foreign Minister Rafael Ramirez saying it was willing to curb its own output if Opec agreed to reduce production at its November 27 gathering.

Libya and Ecuador have also called for Opec to cut output.

Iran urged fellow Opec members to shore up oil prices, which have fallen 30% since June as new supplies from North America have overwhelmed demand at a time of lacklustre global economic growth.

"I hear more and more sounds indicating that markets are expecting a possible cut in Opec production, from a more balanced view earlier," said Hans van Cleef, senior energy economist at Dutch bank ABN Amro in Amsterdam.

"Even if Opec cuts production without altering its output target, it is moderately bullish," Mr van Cleef added.

Speculation over what Opec might do pushed Brent to a high of $80 a barrel in early Asian trade on Friday and US crude futures rose nearly $1.

Brent was up 30c at $79.63 a barrel by 8.50am GMT after jumping $1.23 in the previous session. The benchmark could snap an eight-week slide if the gains are sustained on Friday.

US crude was up 40c at $76.25 a barrel after gaining $1 in the previous session.

Oil prices were supported by a raft of US economic data showing the world’s largest economy and single-biggest oil consumer was growing faster than many economists had expected.

Factory activity in the US mid-Atlantic region expanded in November to its highest level in 21 years, while home resales rose to an annual rate of 5.26-million units, the highest since September 2013.

Investors kept a wary eye on talks in Vienna between Iran and the big world powers over Tehran’s nuclear programme.

Sharp divisions remain at the talks, which could result in the tightening, or ending, of sanctions that have severely restricted the Islamic state’s oil exports.

Officials have said the nuclear talks could be extended to March from November 24.

Published on:
November 21, 2014
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