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Oil higher ahead of OPEC decision
LONDON, England -- Oil prices climbed higher on Thursday on expectations that OPEC will tighten output while a strike in Venezuela keeps exports to a minimum. Saudi Arabia, the world's biggest oil producer, is urging other members of the Organization of Petroleum Exporting Countries to back its plan to reduce excess supplies and maintain prices at three-year highs. Oil spiked in Asia on Thursday and continued to rise in early London trading after Venezuelan production fell to less than one-third of daily output as a strike in protest of President Hugo Chavez entered its eleventh day. Crude oil for January delivery was up 13 cents to $26.38 a barrel in early trading on Thursday. "The impact of both Venezuela and OPEC are likely to be supportive in the short term,'' wrote Simon Games-Thomas, head of energy at NM Rothschild & Sons in Sydney, in a research note. Venezuela strike continuesPrices increased after initially dipping following reports that Venezuela, the world's fifth largest oil supplier, had loaded its first oil shipments since a general strike paralyzed oil exports. The country normally supplies around 13 percent of the United States' oil imports. Venezuelan Oil Minister Rafael Ramirez said a total of four oil tankers were loading or had completed loadings at ports across the country in defiance of the strike. However, strike leaders quickly contradicted the government's statement that oil shipments were being resumed and said no end to the deadlock was in sight. "That's totally false,'' Juan Fernandez, a striking executive in the giant state oil firm PDVSA, told reporters. "We have more than 40 vessels waiting and they've tried to load two,'' he said. Shipping agents said at least two ships have been loading and another two were due to load. All eyes on OPECTraders also were keeping a close eye on signals from OPEC ministers arriving for Thursday's meeting in Vienna, which will aim to tighten the Middle East-dominated cartel's adherence to formal output limits and in doing so cut world supplies. Saudi Arabia is confident that a plan to cut excess production and raise formal quotas will get approval at the meeting, a Gulf source said on Wednesday. "This idea has been under discussion for four months among several countries, it is not just a Saudi idea,'' said the Gulf source who is familiar with Saudi policy. He said he saw no opposition to the plan. Saudi Oil Minister Ali al-Naimi said OPEC was likely to reduce supply by 1.5-2.0 million barrels a day and at the same time raise official output limits by 1.0-1.5 million. OPEC output in October was estimated at 2.8 million barrels a day in excess of official quotas of 21.7 million, according to OPEC data. Reuters contributed to this report.
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