Oil rises to $73 on expectation of OPEC cut

SINGAPORE - Oil prices rose to $73 a barrel in Asia on Monday on expectations that OPEC will cut production quotas at an extraordinary meeting later this week.

Light, sweet crude for November delivery rose $1.16 to $73.01 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract Friday gained $1.53 to settle at $71.38.

Chakib Khelil, president of the Organization of Petroleum Exporting Countries, said Sunday that members plan to announce a "substantial" cut at a meeting that begins Oct. 24 in Vienna.

Khelil, who is also Algeria's energy minister, said OPEC may cut output again at a meeting in December, and that the group considers the oil market oversupplied by about 2 million barrels a day, Khelil said.

Venezuelan President Hugo Chavez said Sunday he would like prices between $80 and $90 a barrel.

"The market is factoring in a big cut. It will likely be as much as 2 million barrels," said Mark Pervan, senior commodity strategist with ANZ Bank in Melbourne. "I think they will go pretty large just to change the sentiment."

Investors largely ignored an OPEC output reduction of about 520,000 barrels a day last month, focusing instead on weakening demand.

Fears that turmoil in global financial markets will spark an economic slowdown in developed countries has helped push prices down from a record $147.27 in July.

Last week, news of rising US oil inventories, falling retail sales and slowing housing starts fueled concerns that the world's largest economy may face a major recession that will undermine demand for crude.

"Oil demand in the US will be a bellwether," Pervan said. "If the US, Europe and Japan go into a major recession, there's no reason we can't see $35, $40 a barrel."

In other Nymex trading, heating oil futures rose 1.65 cents to $2.15 a gallon, while gasoline prices gained 2.44 cents to US$1.69 a gallon. Natural gas for November delivery jumped 14 cents to US$6.93 per 1,000 cubic feet.

In London, November Brent crude was up 95 cents to US$70.55 a barrel on the ICE Futures exchange.