The OPEC is preparing a substantial decline in production for its next meeting Dec. 17 in Algeria, while the global economy continues to deteriorate, weighing on oil demand, and prices dégringolent. Daily Forex News And Tips / Make Money by Learning
At a consultative meeting in Cairo Saturday, the Organization of Petroleum Exporting Countries maintained its output unchanged but "agreed to take additional action" to stabilize the market "on December 17," said Chakib Khelil, Algerian Minister Petroleum and president of the cartel until the end of 2008.
Its secretary general, Abdullah al-Badri, was even more explicit in stating that there was within OPEC "a general consensus for action" in favor of lower production at "the next meeting" Oran.
They clearly set the stage for a further drop in production of the cartel, the third in four months.
Without giving any precise figure, Mr. el-Badri spoke of a "substantial".
For Raad Alkadiri, an analyst for PFC Energy, OPEC has "signs" in favor of a drop of 1.5 to 2 million barrel per day (MBD).
"I think they will have to cut at least 1 MBD," adds Bill Farren-Price, of Medley Global Advisors.
The Iranian Minister of Petroleum, Gholam Hossein Nozar, said Sunday that the world market suffered from a surplus of 2 MBD. But he refused to specify the size of the reduction that Tehran wanted for the meeting of Oran.
On 24 October, OPEC announced a drop of 1.5 MBD from the threshold of production of its 11 members subject to quotas (Iraq is excluded) to 27.3 MBD from 1 November.
In September, they had already called for strictest compliance with quotas, which amounted to a drop in production of some 500,000 barrels per day.
"The OPEC faces the toughest circumstances since 10, even 30 years," making the tough decisions and relations among its members split over "and even" tense, "says Raad Alkadiri, an analyst for PFC Energy, which stresses that the market is "extremely bearish".
OPEC, which produces 40% of the world's oil, faces a dilemma: do not sufficiently tighten its offer would result in the formation of a surplus in the oil market and push prices even more on the downside, too would be reduced against -productive.
The cartel had paid dearly for ten years ago its lack of responsiveness to the Asian crisis. It had reduced its production too late and prices had fallen below 10 dollars a barrel.
The OPEC wants to avoid that scenario from happening again, while the price of crude fell by nearly 70% since their record in July, falling under $ 50 last week, the lowest in nearly four years.
But too reduce oil supply could aggravate the critical situation are already facing developed countries, most of whom are now in recession, and accelerate the slowdown of growth in emerging high consumers like China or the India.
"The economic situation is deteriorating each week," says Bill Farren-Price, undermining demand for black gold.
"Whenever oil prices begin to decline, the internal politics of OPEC becomes more difficult", hence the increasingly close meetings, he adds.
Car pumping less oil means an immediate sell less and see its earnings decline. In addition, reduce the bid to take the risk to members of OPEC to see non-OPEC producers gain market share at their expense.
The Secretary General has therefore taken the opportunity to call on countries outside OPEC to take part in the decline in production of the cartel, and noted that Mexico, Norway and Russia should come to the meeting of Oran.
At a consultative meeting in Cairo Saturday, the Organization of Petroleum Exporting Countries maintained its output unchanged but "agreed to take additional action" to stabilize the market "on December 17," said Chakib Khelil, Algerian Minister Petroleum and president of the cartel until the end of 2008.
They clearly set the stage for a further drop in production of the cartel, the third in four months.
Without giving any precise figure, Mr. el-Badri spoke of a "substantial".
For Raad Alkadiri, an analyst for PFC Energy, OPEC has "signs" in favor of a drop of 1.5 to 2 million barrel per day (MBD).
"I think they will have to cut at least 1 MBD," adds Bill Farren-Price, of Medley Global Advisors.
The Iranian Minister of Petroleum, Gholam Hossein Nozar, said Sunday that the world market suffered from a surplus of 2 MBD. But he refused to specify the size of the reduction that Tehran wanted for the meeting of Oran.
On 24 October, OPEC announced a drop of 1.5 MBD from the threshold of production of its 11 members subject to quotas (Iraq is excluded) to 27.3 MBD from 1 November.
In September, they had already called for strictest compliance with quotas, which amounted to a drop in production of some 500,000 barrels per day.
"The OPEC faces the toughest circumstances since 10, even 30 years," making the tough decisions and relations among its members split over "and even" tense, "says Raad Alkadiri, an analyst for PFC Energy, which stresses that the market is "extremely bearish".
OPEC, which produces 40% of the world's oil, faces a dilemma: do not sufficiently tighten its offer would result in the formation of a surplus in the oil market and push prices even more on the downside, too would be reduced against -productive.
The cartel had paid dearly for ten years ago its lack of responsiveness to the Asian crisis. It had reduced its production too late and prices had fallen below 10 dollars a barrel.
The OPEC wants to avoid that scenario from happening again, while the price of crude fell by nearly 70% since their record in July, falling under $ 50 last week, the lowest in nearly four years.
But too reduce oil supply could aggravate the critical situation are already facing developed countries, most of whom are now in recession, and accelerate the slowdown of growth in emerging high consumers like China or the India.
"The economic situation is deteriorating each week," says Bill Farren-Price, undermining demand for black gold.
"Whenever oil prices begin to decline, the internal politics of OPEC becomes more difficult", hence the increasingly close meetings, he adds.
Car pumping less oil means an immediate sell less and see its earnings decline. In addition, reduce the bid to take the risk to members of OPEC to see non-OPEC producers gain market share at their expense.
The Secretary General has therefore taken the opportunity to call on countries outside OPEC to take part in the decline in production of the cartel, and noted that Mexico, Norway and Russia should come to the meeting of Oran.
