Surprise OPEC cut sends oil back up.

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Oil prices rebounded back above $100 yesterday after OPEC agreed to cut its output by half a million barrels a day to stem "dramatic" falls in the market.Faced with weakening economic growth and fears of over-supply, the cartel opted to rein in over-production by members, with the bulk of the cuts expected to be shouldered by Saudi Arabia. Official quotas were unchanged.The ultimate impact on the market will depend on the discipline of members in reducing their output to levels specified in their official quotas, analysts believe.Oil prices topped a record $147 in July but have since fallen around 30 per cent, even hitting $98.89 in Asian trade prior to the OPEC decision."The market was coming down very dramatically. I hope it will relax now," said OPEC secretary general Abdullah al-Badri yesterday after the marathon meeting, which broke up in the early hours of the morning.Badri insisted that OPEC was not trying to fix a $100 threshold. "We don't want to see prices drop dramatically," he said, adding: "I assure you we did not discuss any price tag at all."

"We have been adding more crude to the market than we should... We're asking that those who overproduce go back to their production allocation," he said.Meanwhile, the International Energy Agency (IEA) cut its estimate for global oil demand this year and next, saying consumers, mainly in the US, are changing their lifestyles in response to high prices.New York's main contract, light sweet crude for delivery next month, stood at $103.34 a barrel following the IEA report.

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