NEW YORK (MarketWatch) -- Crude-oil futures rose 3% Monday, rallying for a second straight session after the chief of the Organization of Petroleum Exporting Countries said the cartel should cut production quotas at Friday's meeting.
OPEC should order a "substantial" cut in oil output at its emergency meeting in Vienna, Algerian Energy Minister and current OPEC President Chakib Khelil said Saturday, according to media reports.
Crude for November delivery rose $2.17, or 3%, to $74.02 a barrel on the New York Mercantile Exchange. It rallied to $74.50 earlier. Crude had lost 8% last week on increasing concerns that the global financial crisis will lead to a decline in oil demand.
Oil was rising "on heightened expectations that OPEC would reduce production," wrote Nimit Khamar, an energy analyst at Sucden Research. Speculation that "financial crisis may be easing" also contributed to the rally.
OPEC, the cartel that controls 40% of the world's oil production, last Thursday brought forward its meeting, originally scheduled for Nov. 18, to Friday.
Pressures have been mounting within the 13-member group to cut production as crude prices have slumped by more than 50% from its all-time high of $147.27 hit in July.
"There will be a reduction in production at the next extraordinary meeting of OPEC, and it will have to be a substantial one to get the balance right between supply and demand," Khelil said, according to Agence France-Presse, or AFP.
Khelil said that OPEC wanted to see oil prices "remain stable" throughout the first half of 2009. "We want a stable price per barrel -- neither too high, nor too low, between 70 and 90 dollars," Khelil said.
Separately, OPEC Secretary General Abdullah al-Badri may meet Russia's top leaders in Moscow on Tuesday as OPEC and Russia seek closer ties, Russia's Energy Minister Sergei Shmatko said, according to Reuters.
Although Shmatko said the two sides would not discuss production cuts, Russia and other non-OPEC oil producers "may also be invited to join" a production reduction, said Michael Fitzpatrick, an analyst at futures brokerage MF Global.
Russia is the world's second-largest oil producer after Saudi Arabia.
Other energy futures rallied on Nymex Monday. November reformulated gasoline rose 2.49 cents, or 1.4%, to $1.6910 a gallon, and November heating oil gained 5.34 cents, or 2.5%, to $2.1863 a gallon.
November natural-gas futures climbed 14.9 cents, or 2.2%, to $6.9350 per million British thermal units.
Crude oil prices have been falling as the likelihood of a global recession increases.
On Monday, China's National Bureau of statistics, said its economy, which accounts for the bulk of growth in global oil demand, decelerated more than expected in the third quarter, marking the fifth straight quarterly slowdown.
China's economy expanded 9% in the third quarter after growing 10.1% in the second. See full story.
As recession fears grip major world economies, OPEC other major energy organizations have slashed their forecasts for global oil demand.
OPEC said last Wednesday that global oil consumption will grow 550,000 barrels a day this year compared with a year ago, down 330,000 barrels from last month's forecast.
The International Energy Agency and U.S. Energy Department's Energy Information Administration also lowered their forecasts. See full story.
