NEW YORK – Oil rose to $60 a barrel Thursday, after OPEC officials said the producer group would cut output by 1 million barrels per day as soon as possible to stem a sharp drop in prices.
U.S. crude settled up 62 cents at $60.03 a barrel, while London Brent advanced 78 cents to $60.
Oil has slid from a peak of $78.40 in July, alarming OPEC, partly due to brimming inventories.
"Prices would have kept coming down unless we saw concrete action by OPEC," said Adam Sieminski, an analyst at Deutsche Bank. "The build in inventories is telling you the market is pretty well supplied."
The plan by the Organization of the Petroleum Exporting Countries, which pumps more than a third of the world's oil, expands on token supply cutbacks announced last week by Nigeria and Venezuela.
Saudi Arabia, the world's top exporter, will lower production by 300,000 barrels per day as part of the plan, an OPEC delegate said.
"The goal now is to cut actual oil production by 1 million barrels daily as soon as possible, but the exact date is still being worked out," the delegate said.
OPEC President Edmund Daukoru said some members wanted to hold an emergency meeting and added that six producers, including Saudi Arabia, had already reduced output voluntarily.
Any cuts were likely to be from the group's official 28 million bpd output ceiling, Daukoru said.
Another OPEC source said the group would meet in Vienna Oct. 18-19 to finalize a deal, provided all members agreed on the need for a substantial cut of at least 1 million bpd.
The reduction would be OPEC's first output cut since April 2004. The group's official output limit has stood at 28 million bpd for more than a year.
All OPEC countries — apart from Iraq, exempt from OPEC supply quotas, and Indonesia, a net importer — are to take part in the supply curbs, the senior delegate said.
"ALL WE CAN GET"
OPEC's plan dismayed the United States, the world's top oil consumer, which has expressed concern about the effects of high energy costs on consumers.
U.S. Energy Secretary Sam Bodman said he did not want OPEC to cut daily output by 1 million barrels, and White House economic adviser Al Hubbard said President Bush was not happy with oil prices near $59 a barrel.
"We still need oil for sure. We still need all the oil we can get," Bodman told Reuters in a telephone interview.
Bodman said he planned to drive that point home in conversations with ministers of the Organization of Petroleum Exporting Countries.
Peak winter demand for heating fuel lies just around the corner.
Oil has come under pressure from brimming fuel inventories in the United States. Crude hit an eight-month low in New York on Wednesday.
U.S. crude stocks rose by 3.3 million barrels last week to 328.1 million barrels, countering expectations for a drop and leaving them nearly 7 percent higher than a year ago, according to a government report.
Distillate supplies, which include heating oil, rose 200,000 barrels to the highest level since 1999.
The high level of global fuel stockpiles is a greater concern to OPEC than the price of oil, the delegate said.
Oil also drew support from a fresh outbreak of violence in the oil-producing region of Nigeria, Africa's top producer.
The world's eighth-largest oil exporter already has shut down more than a quarter of its oil output for most of this year because of civil unrest.