Oil rallies to top $53 on OPEC, stocks support

PRICE RISE: Oil rose to $51 on Monday on improved sentiment about the global economy. (Getty Images)

Oil rose by more than $3 a barrel on Monday as investors considered the prospect of a further OPEC supply cut and as stock markets rallied following the US government rescue of US bank Citigroup.

Venezuela said on Sunday the Organization of the Petroleum Exporting Countries should cut supply further, while Iran made similar remarks on Monday. OPEC oil ministers meet for informal talks in Cairo on Nov. 29.

"The demand scenario suggests we need another cut. But at the end of the day, there is a certain scepticism in the marketplace that OPEC is going to deliver at this weekend's meeting," Rob Laughlin, broker at MF Global, said.

US crude rose $3.42 to $53.35 by 1550 GMT. The contract had dipped to a 3-1/2-year low of $48.25 on Friday. Brent crude was up $3.22 at $52.41.

Rising equities, following the bailout of Citigroup, and increased demand for winter heating fuel in northwest Europe also boosted oil, traders said. The UK's FTSE 100 index gained almost 5 percent.

"The FTSE is up so that should provide support, as should the colder weather," said Christopher Bellew, a broker at Bache Commodities. "All the considerable amount of bearish data may finally be priced in."

The US dollar weakened against a basket of other major currencies, also supporting crude. Dollar weakness can increase the appeal of oil and other commodities as an investment.

Analysts said the market would be watching US President-elect Barack Obama's announcement of his economic team later in the day, as he worked on a stimulus plan designed to lift the country out of its worst financial crisis in decades.

Oil has plummeted nearly $100 a barrel since its record high of $147.27 in the summer as the high prices of earlier this year and the recent credit crisis have hit demand in the United States, Europe and parts of Asia.

Venezuelan Oil Minister Rafael Ramirez urged OPEC on Sunday to agree to cut supply by 1 million barrels per day (bpd) at the emergency meeting in Cairo and make the cut take effect before the end of the year.

The comments were echoed by Iran's OPEC governor, who said in remarks published on Monday that OPEC needed to reduce output further.

OPEC has not called a full-blown policy meeting in Cairo, but ministers are to gather informally on the sidelines of a gathering of Arab oil ministers. After that, OPEC holds a formal meeting on Dec. 17 in Algeria. (Reuters)

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