OPEC Preparing Output Cut to Boost Prices After Slump (Update2)

By Ayesha Daya and Fred Pals

Oct. 24 (Bloomberg) — The Organization of Petroleum Exporting Countries is preparing to cut oil production for the first time in almost two years to stem a collapse in prices.

Ministers of the 13 nations gathered at the group’s Vienna headquarters at 9:30 a.m. local time, where Iran and Venezuela, two of the countries most dependent on high prices, will push for reductions.

“Prices should firm up and move higher in the short term” with a reduction of 1 million to 2 million barrels a day, Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut, said yesterday. “Unless there is something huge announced, the market will eventually start moving lower again because of the weak economy.”

Crude oil has tumbled 55 percent from a July 11 record of $147.27 a barrel as the financial market crisis spreads, job cuts increase and fuel consumption slows. Oil fell as much as 1.8 percent to $66.63 in New York this morning.

The International Energy Agency said Oct. 10 that demand among its 28 member nations will fall 2.2 percent this year.

Kuwaiti Oil Minister Mohammed al-Olaim said there will be a cut in production at today’s meeting. He declined to specify the size of the reduction, saying that it wouldn’t be large enough to harm the global economy.

The meeting may last at least two hours, the United Arab Emirates’ oil minister Mohamed al-Hamli said today.

OPEC members have a “consensus” on cutting

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