Oil steady at $37.45/barrel

SINGAPORE (AP) – Oil prices stayed above $37 a barrel yesterday in Asia as OPEC members talked up more production cuts over the weekend amid weakening global demand for crude.

Light, sweet crude for March delivery fell 6 cents to $37.45 a barrel by midday in Singapore on the New York Mercantile Exchange. The contract rose $3.53 on Friday to settle at $37.51.

The Organization of Petroleum Exporting Countries has implemented most of the 4.2 million barrels a day of output reductions announced since September, but the cuts have been overwhelmed by a collapse in crude demand amid the global slowdown.

On Sunday, Mohammed Saleh al-Sada, Qatar’s minister of state for energy and industry affairs, said OPEC is ready to cut output further when it meets next month. Al-Sada said a reasonable price for oil would be $70 a barrel.

Venezuelan Oil Minister Rafael Ramirez said Saturday his country would support new production cuts in the face of rising crude inventories.

“It’s probably 50-50 that they’ll cut again in March,” said Clarence Chu, a trader at market maker Hudson Capital Energy in Singapore. “The budgets of a lot of those countries run on oil so they need the price higher.”

Even within OPEC, however, there is skepticism over whether reducing supply will spur higher prices.

Moussa Marafi, a high-ranking Kuwaiti oil official, told Annahar newspaper in comments published Sunday that crude prices are unlikely to rise above $40 per barrel, even if OPEC decides to cut as much as 2 million barrels per day next month.

Oil prices are being pressured by surging US crude inventories and a lack of compliance to quotas by some OPEC members, he said.

“Until demand picks up, oil won’t have a significant rally,” Chu said. “Another big OPEC cut could add $5 to the price, but it’s not going to send it to $70.”

US markets are closed Monday for Presidents Day.

Investors have already priced in the passage of a $787 billion stimulus package that President Barack Obama plans to sign on Tuesday and will be looking for its impact on consumer and industrial demand in the coming months.