The cut brings production back in line with a 28.8 million bpd limit oil exporters had set a year earlier. OPEC ministers said the cut was aimed to reduce a current oversupply.
It certainly was a strong sign that crude producers want to keep prices in the three-digit area.
At $100 oil OPEC countries rake in $86.4 billion in monthly oil revenues.
Crude oil jumped in New York as OPEC President Chakib Khelil called on members to stop producing more than the group's set quota after prices fell to almost $100 a barrel.Bloomberg also cites from a study that says speculators sold $39 billion in oil futures between the July peak at $147 and September 2. Limits on traders would cut oil to $65/70, it is believed.
The Organization of Petroleum Exporting Countries is pumping about 520,000 barrels a day more than their 28.8 million-barrel limit, Khelil said. The group kept its output quota unchanged after adjusting for the departure of Indonesia and including new members Angola and Ecuador, according to Bloomberg data.
"It's definitely a defensive measure to keep prices above $100,'' said Jonathan Kornafel, a director for Asia at Hudson Capital Energy. "They don't want to see us go back to $140 or $150 but they want us over $100. It's a bit of a shock to the market and that's why we're up.''
Commodity index investors, blamed for record oil prices, sold $39 billion worth of oil futures between their July record and Sept. 2, causing crude to plunge, according to a report to be released today.New upward pressure may come from hurricane Ike which is expected to make landfall in Texas.
The work by Michael Masters, president of the Masters Capital Management hedge fund, blames investors who buy and hold an index of commodities for driving prices to records, and for their subsequent drop. It comes a day before the U.S. Commodity Futures Trading Commission is set to discuss its own study of energy trading with a congressional committee.
Masters testified three times before Congress this year, arguing that limits on traders would cut oil prices to $65 to $70 a barrel. He has been cited by lawmakers who introduced at least 20 measures to curb speculation. Congressional pressure on the CFTC to step up enforcement and restrict anonymous trades has pushed index traders out of their positions, Masters said.
Hurricane Ike started to strengthen as it entered the Gulf of Mexico and headed in the direction of Texas, after leaving more than 170 people dead when it lashed Cuba and Haiti.
Ike's eye was 100 miles (165 kilometers) north-northeast of the western tip of Cuba and moving west-northwest at 7 miles per hour at 2 a.m. Miami time yesterday, according to the U.S. National Hurricane Center. Ike's winds strengthened to 80 miles per hour from 75 mph earlier.
The storm is forecast to make landfall between Corpus Christi, Texas, and Houston, according to a chart from the Hurricane Center.
Find the US short term oil outlook from the Energy Information Administration here.
Gold followed oil to a new 2008 low around $763.