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World oil prices higher in Asian trade on Fed cut hopes

SINGAPORE - World oil prices advanced in Asian trade Wednesday, mirroring gains on stock exchanges, as markets looked to an expected rate cut by the Federal Reserve to boost the flagging US economy, dealers said.

Comments by OPEC that more production cuts are likely if prices continue to fall also bolstered the market, they said.

New York's main contract, light sweet crude for December delivery rose 2.43 dollars to 65.16 dollars a barrel from its close at 62.73.

Brent North Sea crude for December delivery was 1.93 dollars higher at 62.22 dollars a barrel from 60.29 in London.

Analysts expect the Federal Reserve to cut key interest rates by a half-point to 1.0 percent, or even lower, later Wednesday in an effort to kick-start the US economy and ease the global credit crunch.

The US government has already announced multi-billion dollar rescue packages and any new moves to lift the sagging economy of the world's largest energy user are likely to help oil demand, dealers said.

"They are seeing the rescue packages are going to help, therefore maybe the impact of the recession will not be as harsh as previously thought," said David Johnson, an oil analyst with Macquarie Securities.

"Therefore oil demand won't be as hard hit," he said.

Meanwhile the head of the Organisation of the Petroleum Exporting Countries (OPEC) oil cartel warned Tuesday that it could cut output again if prices keep falling, despite an emergency reduction last week.

"We will have to wait and see how the market will react... (but) if this problem continues then we will have another cut," OPEC's Secretary General Abdalla Salem El-Badri told reporters on the sidelines of an oil conference in London.

"If the situation deteriorated to the point where we had to have another meeting before Algeria we will do that," he said, referring to the next scheduled OPEC meeting in Oran, Algeria, on December 17.

OPEC ministers agreed at an emergency meeting in Vienna on Friday to slash output by 1.5 million barrels a day to 27.3 million barrels from November 1 as the cartel seeks to shore up prices.

Oil prices are down by more than 50 percent since July's record highs above 147 dollars, on growing concern that demand will be hit by slowing global growth.

Venezuelan President Hugo Chavez said he would support further cuts in production "until the price stabilises", during a visit to fellow OPEC member Ecuador.

He said if Venezuela, which produces 3.3 billion barrels a day, had to cut production by a million barrels he "would have no problem in proposing and approving a measure like this."

OPEC pumps about 40 percent of the world's crude.