* U.S. crude futures jump $1 after OPEC agrees effective
cut
* OPEC decision cuts output by 520,000 bpd vs July
* Analysts question whether downtrend is broken
By Angela Moon
SEOUL, Sept 10 (Reuters) - Oil prices jumped more than $1 a
barrel on Wednesday, rebounding from a five-month low after
OPEC surprised traders with a deal to effectively cut
production by just over 500,000 barrels per day (bpd) from July
levels.
Most analysts had expected the producer cartel to maintain
formal targets at its meeting in Vienna, although some had
suggested they could tighten compliance in order to help stem a
near 30 percent slump in oil prices since July.
U.S. crude <CLc1> for October delivery was up 52 cents at
$103.78 a barrel by 0230 GMT, reversing earlier losses of more
than $1 a barrel after the OPEC decision. Prices slumped to
their lowest in five months a day ago.
London Brent crude <LCOc1> rose 63 cents to $100.97, after
falling below $100 on Tuesday for the first time since April.
"Since the market is over-supplied, the conference agreed
to abide by September 2007 production allocations (adjusted to
include new members Angola and Ecuador and excluding Indonesia
and Iraq), totalling 28.8 million bpd," the group said in a
communique after a nearly five-hour meeting. []
OPEC President Chakib Khelil said the decision would mean
reducing production by about 520,000 bpd versus July levels, a
reduction of about 1.8 percent, and that he still saw surplus
oil supply building on the market by the end of the year.
Analysts said the group had sent a clear message to
markets.
"It certainly shows that OPEC is not afraid to defend a
$100 price level," said Jonathan Kornafel, Asia director at
U.S.-based options trader Hudson Capital Energy.
Edward Meir, analyst at brokers MF Global in New York,
agreed: "The boys at OPEC have thrown a surprise by cutting
production... I expect the (market) reaction to intensify as
the day goes on."
The calculations of the new target were complicated by the
inclusion of new members and the removal of Indonesia, which
asked that its membership be suspended, and some analysts
questioned whether the cuts would fully materialise without
details on which countries would be expected to curb supply.
Other analysts said the cut was modest compared to the
risks to global oil demand posed by high prices and endangered
economic growth, which are already taking their toll.
"I don't think the cut can actually stop the current
downtrend in the oil market," said Susumu Ogasawara, a manager
at Ace Koeki Co Ltd in Tokyo.
"The focus will shift back to falling demand and concerns
about the global economy."
STOCKS, HURRICANES
Later in the day traders will seek direction from U.S.
inventory data, expected to show a fall in U.S. crude stocks by
4.4 million barrels in the week to Sept 5 after Gustav shut
down fields, according to a Reuters poll of analysts.[]
Gasoline stocks were seen falling by 4.2 million barrels
and distillates by 2.7 million barrels in the data.
Meanwhile Hurricane Ike's progress toward the U.S. Gulf of
Mexico kept most oil and natural gas production shut in for a
second week, although its path has recently shifted south and
west of the biggest concentration of production platforms,
aiming instead toward the Texas refining hub of Corpus Christi.
[].
(Reporting by Angela Moon; Writing by Jonathan Leff; Editing
by Sambit Mohanty)
