Oil Rises to $81 on Hopes for OPEC Move

China cuts interest rates to help sagging economy; Venezuela willing to cut oil production, minister says.

Brent crude oil rose more than $2 to above $81 a barrel on Friday after China cut interest rates and on speculation that OPEC could agree next week to reduce oil production.

China's central bank cut its benchmark interest rates for the first time in more than two years on Friday to reduce borrowing costs and support an economy on track for its slowest annual growth in 24 years.

The rate cut added to a positive mood among oil traders, many of whom expected an agreement by the Organization of the Petroleum Exporting Countries on Nov. 27 to trim production.

Brent rose $2.28 to a high of $81.61 a barrel before easing back to trade around $81.50 by 1240 GMT. The North Sea crude oil benchmark was on course for its first weekly rise since September after eight consecutive weeks of falls.

U.S. crude was up $1.80 at $77.65 a barrel.

"Commodity prices rise across the board, base metal prices in particular, but oil prices as well. Apparently there is hope that this step will lift commodities demand," Carsten Fritsch, senior oil and commodities analyst at Commerzbank, told Reuters Global Oil Forum.

There was increasing speculation that OPEC would move to reduce its output to reverse a market collapse that has knocked almost 30 percent of crude oil prices since June.

Venezuela reiterated its call for production cuts, with Foreign Minister Rafael Ramirez saying it was willing to curb its own output if the Organization of the Petroleum Exporting Countries agreed to reduce production at its Nov. 27 gathering.

Russia's Foreign Ministry said on Friday Russia and Saudi Arabia had expressed "a willingness to cooperate on issues related to energy and oil markets".

Its energy minister also said Russia might cut oil production to shore up flagging prices, although its ability to change output was limited and no decision had been made yet.

"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.

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.
 

By Christopher Johnson