Oil prices jump more than $1 as Opec sets cut

Oil prices rose more than a dollar a barrel on Tuesday after producer group Opec made a surprise decision to slice a million barrels per day of its supply from world markets starting in April.
The cut, which will take effect just as US refiners build up stocks for the spring driving season, drew a warning from the White House that the cartel should avoid a move that would risk stunting world economic growth.
US light crude futures gained $1.36 to $34.19 a barrel by early afternoon, while London Brent rose $1.27 to $30.38 a barrel.
The Opec deal, struck at a ministerial meeting in Algiers, slices 4 percent from production limits for the group that controls half the world's oil trade to 23.5 million barrels a day, effective April 1.
Ministers said the Organisation of the Petroleum Exporting Countries would also immediately eliminate 1.5 million barrels a day of leakage being pumped above existing quotas.
Leading Opec producer Saudi Arabia said action was needed to prevent a price crash as demand slackens and world oil inventories build after the Northern Hemisphere winter.
"The inventory, where it is now, is fine, we don't want to see it building," said Saudi Oil Minister Ali al-Naimi. "We don't want to see a precipitous fall in prices."
Dealers said the agreement would protect Opec against a price slump but could undermine cartel credibility because of the ballooning gap between official quotas and actual output.
"It's a clever move by Opec, giving the market some support before the second quarter," said Oystein Berentsen, head of crude trade at Norway's Statoil.
"But given the amount they are leaking people will want to see how much of the cut they implement. There's a question mark over their credibility."
For consumer nations the pact looks like a threat to world economic recovery and a reminder that Opec appears prepared to defend prices above its official $22-$28 target range. "It is our hope that producers do not take actions that undermine the American economy ... and American consumers," said a spokesman for the White House.
The US Department of Energy has said retail gasoline prices in January averaged the highest ever recorded for that month.