Oil Futures Rise to Highest Price Level in Months : Traders Say Recent OPEC Accord on Production Cuts May Start to Take Hold

Crude oil futures jumped to 10-month highs in Chicago trading on Wednesday as the market erased Tuesday’s losses and gave a vote of confidence to OPEC’s new production agreement.

The February contract for West Texas Intermediate crude oil on the New York Mercantile Exchange gained 36 cents to close at $17.27 a barrel. The price had fallen below the $17 level Tuesday as traders took profits by selling contracts that they bought before the Organization of Petroleum Exporting Countries agreed last weekend to trim production.

Traders said the recovery signaled that the market is beginning to believe that the cartel might succeed in supporting prices with its new agreement.

“On balance, this is going to be looked at as a vote of confidence,” said Peter Beutel, a petroleum analyst in New York with Elders Futures.

Mobil Raises Posted Rates

In New York, Mobil Corp., the nation’s second-largest oil company, boosted the price it will pay for West Texas Intermediate, the U.S. benchmark domestic crude oil, by 41 cents a barrel to $15.25. The company also raised the price for West Texas Sour to $14.75 and Light Louisiana Sweet to $15.60.

In Canada, Alberta oil producers were reported to be getting a Christmas bonus worth up to $2 million a day as their Canadian customers passed along price increases on international markets. Refinery postings are rising to their highest levels in nine months.

Imperial Oil Ltd. and Texaco Canada Inc. led the way on Tuesday by announcing new prices of $22.73 (Canadian) a barrel, with their refineries paying increases of up to 9%, or $1.90. (The Canadian dollar is equivalent to 72.3 U.S. cents.)

Petro-Canada set a new posting of $22.10 (Canadian). Shell Canada was reported to be reviewing its price. And such smaller refiners as Turbo Resources and Husky Oil are expected to follow.

Meanwhile, Indonesia’s benchmark crude will be pegged at $17.55 a barrel effective Feb. 1, the nation’s minister of mines and energy told a news conference in Jakarta. The oil had sold for as little as $13.50 before the OPEC accord.

The OPEC pact, agreed to last Saturday after rough negotiations in Geneva, could allow Saudi Arabia, the world’s biggest oil exporter, to balance its delayed 1987 budget without devaluing its currency, according to some economists. If the pact does push prices to $18 a barrel, the kingdom would generate $20 billion to $22 billion in oil export revenue.

Saudi Arabia is expected to unveil its twice-postponed budget on Sunday. Economists said that while the emphasis would still be on austerity, spending plans could breathe new life into the recession economy.