* U.S. crude futures up 40 cts after OPEC agrees tightening
* OPEC president: decision cuts output 520,000 bpd vs July
* Analysts question whether downtrend is broken
(Updates prices)
By Angela Moon
SEOUL, Sept 10 (Reuters) - Oil rebounded more than $1 on
Wednesday from a five-month low, after OPEC agreed to a small
but unexpected production cut that some analysts said showed
their resolve to keep prices above $100 a barrel.
The Organization of the Petroleum Exporting Countries said
it had agreed to revise its complex output targets, which its
president said meant reducing supply by about 520,000 barrels
per day (bpd) versus July over the next 40 days. []
Most analysts had expected the producer cartel to maintain
formal targets at its meeting in Vienna, although some had
suggested they could tighten compliance to help stem a near 30
percent slump in oil prices since July.
U.S. crude <CLc1> for October delivery surged more than $1
early in the day, but by 0639 GMT stood 40 cents higher at
$103.66 a barrel, having touched a five-month low of $101.74 on
Tuesday.
London Brent crude <LCOc1> rose 28 cents to $100.62, 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 warned 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, which had been battered by a recovery in the U.S.
dollar and a darkening economic outlook that has spurred an
exodus of investment funds from the whole commodities complex.
"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.
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. Some analysts
questioned whether the cuts would fully materialise without
details on which countries would be expected to curb supply.
But others said the fact that OPEC chose to make its
decision explicit -- rather than merely agreeing to tighten
compliance with existing limits -- was significant.
"We think this is a serious deal for a real cut... In this
market, direction matters and this is a turn," UBS economist
Jan Stuart said in a report.
But the risks to global oil demand posed by high prices and
endangered economic growth still loomed large, threatening to
undermine a rally that has lifted prices from $20 since 2002.
"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."
The oil cartel, which controls about 40 percent of world
oil production, agreed to meet again in Algeria on Dec 17.
STOCKS, HURRICANES
Later in the day, traders will seek direction from U.S.
inventory data, expected to show a fall in crude stocks by 4.4
million barrels in the week to Sept. 5 after Hurricane Gustav
shut down fields, a Reuters poll of analysts found. []
Gasoline stocks were seen falling by 4.2 million barrels
and distillates by 2.7 million barrels.
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.
[].
(Writing by Jonathan Leff; Editing by Ramthan Hussain)
