Oil prices rallied today on expectations that the Organisation of Petroleum Exporting Countries would begin cutting output as prices hover close to the $100 a barrel mark.
The market was also relieved by the US government's rescue of the country's two giant mortgage finance providers and additionally rebounded from five-month lows on worries that Hurricane Ike could threaten production US facilities in the Gulf of Mexico.
New York's main contract, light sweet crude for delivery in October, rose 71 cents to $106.94 a barrel. Brent North Sea crude for October climbed 72 cents to $104.81. Trading in Brent was temporarily suspended today owing to a technical glitch.
Ahead of OPEC's policy meeting in Vienna tomorrow, Iran led calls for the cartel to slash output by ensuring that members pumped only their official quota and not more.
Oil prices have fallen from record highs above $147 in July, with the OPEC meeting seen as a test of what price level the cartel wants to defend.
Most analysts expect the 13-nation group to agree to trim output informally before waiting until later, possibly at a scheduled gathering in December, to alter its official target.
The trimming would be achieved by members, mainly powerhouse Saudi Arabia, agreeing to cut their excess production above their OPEC quota, which would remove oil from the market but not amount to a formal change in policy.
At present, OPEC is believed to be producing about one million barrels more than its quota of 29.67 million barrels per day (bpd), with Saudi Arabia accounting for most of the excess. OPEC produces about 40% of world oil.
Oil prices had last week tumbled by about 10% to five-month lows close to $104 as Hurricane Gustav spared US refineries and platforms in the Gulf of Mexico. Hurricane Ike was downgraded to a category two storm as it weakened today after slamming into Cuba and pummelling its eastern part with gale-force winds and torrential rain.
