NEW YORK (AP) ó Oil prices rose sharply Monday as OPEC announced member nations will table dozens of planned oil production projects due to falling prices.
Light, sweet crude for March delivery rose $1.35 to $41.52 a barrel on the New York Mercantile Exchange.
OPEC Secretary General Abdalla el-Badri said the group would postpone 35 of 150 new oil and gas projects and would likely fall short of its goal to raise production capacity by five million barrels per day by 2012, according to a research note by analyst Addison Armstrong.
el-Badri also said that OPEC is close to completing its previously announced cut of 4.2 million barrels per day, Armstrong said.
The announcement may boost crude prices, but “they’re only hurting themselves,” said Phil Flynn, an analyst at Alaron Trading Corp.
Any spike in crude prices because of production declines from the Organization of the Petroleum Exporting Countries will make it harder for economies to recover and for demand to pick up naturally, Flynn said.
“And when demand picks up, they won’t have the production capacity to meet it,” he said.
OPEC produces about 40 percent of the world’s crude oil.
Evidence that energy demand will remain depressed for some time continued to roll in Monday.
Nissan forecast its first annual loss in nine years and said it will slash 20,000 jobs from its work force. Chief Executive Carlos Ghosn blamed car maker’s loss on the global economic slump and the appreciating yen.
Meanwhile, home appliance maker Whirlpool Corp. said fourth-quarter profit dropped 77 percent, and Barclay’s PLC warned that further asset write-downs ó on top of the massive $11.9 billion booked for 2008 ó were likely. Britain’s third-largest bank also said executive directors would not be getting any bonuses.
Still, analyst Stephen Schork said oil prices have been relatively stable and likely won’t press down much further. Last week, even as the government reported that more than a half million people were given pink slips in January and U.S. storage facilities were bloated with surplus oil, crude prices hovered between the high $30s and low $40s for a barrel.
“Does this mean the proverbial floor is in? Perhaps, but we are not willing to go there just yet,” Schork wrote in his daily publication, The Schork Report.
Oil, which is traded in dollars, also was given a boost as the dollar fell against European currencies.
Traders on Nymex are watching what happens with a $700 billion financial rescue program in Washington.
The Treasury Department also is considering steps to broaden the use of a new lending facility at the Federal Reserve, provide government guarantees to help banks deal with their troubled assets, and continue direct infusions of capital into banks in exchange for securities and tougher accountability rules.
So-called toxic assets ó securities for which markets have dried up, making them impossible to value ó have been weighing on banks’ balance sheets, preventing them from lending to the wider economy and stifling economic recovery. Experts hope the Treasury’s plan to manage these bad assets would brighten the outlook for the U.S., the world’s largest oil consumer.
The national retail average price for a gallon of regular gas climbed 0.3 cents to $1.924 a gallon overnight, according to auto club AAA, the Oil Price Information Service and Wright Express. That is about 13 cents a gallon above what it was a month ago, but about $2.29 below last July when prices peaked at $4.11 per gallon.
In other Nymex trading, gasoline futures rose 3.4 cents to $1.2845 a gallon. Heating oil rose 4.6 cents to $1.4057 a gallon, while natural gas for March delivery dropped 8.4 cents to $4.858 per 1,000 cubic feet.
In London, the March Brent contract rose $1.05 to $47.26 on the ICE Futures exchange.