According to Bloomberg :
Sept. 28 (Bloomberg) — OPEC members, seeking to halt a two- month plunge in oil prices, may cut production as of next week, led by a Nigerian decision to reduce supplies.
The reductions are “voluntary,” rather than a formal accord for each nation to restrain output, Secretary-General Mohammed Barkindo said today in a telephone interview from London. Nigeria, whose member is the president of the Organization of Petroleum Exporting Countries, will lower exports by 5 percent starting Oct. 1, an official from the state’s oil company said.
Oil prices in New York have tumbled 20 percent since touching a record $78.40 a barrel on July 14 as fuel stockpiles climbed and the risk of the United Nations imposing sanctions on Iran eased. OPEC President Edmund Daukoru has contacted other member-states to discuss falling prices, which touched a six-month low Sept. 25.
“OPEC has made some hawkish comments over the last week, which shows a commitment by them to protect the price,” said Katherine Spector, an analyst at JPMorgan Chase & Co. in New York.
The 11-member group agreed at a meeting on Sept. 11 to leave a production quota for 10 of its members unchanged at 28 million barrels a day. Since then, the group’s benchmark oil price has dropped to $55.90 a barrel from $60.70.
Nigeria’s Plan
“OPEC might go with this informal agreement and wait until the next meeting in order to get a full agreement on a cut in quotas,” said Jason Schenker, an economist with Wachovia Corp. in Charlotte, North Carolina. “OPEC is seeing a problem with a softening of demand and ample supplies, but prices are likely to rise if the cuts do come through.”
Barkindo said he met with Saudi Arabian Oil Minister Ali al- Naimi this week and that the country, the world’s biggest crude exporter, is already paring production, Platts reported earlier, citing the acting secretary-general.
“I have spoken with the Saudis in Riyadh and they are continuing to cut,” the report quoted Barkindo as saying.
Kuwait won’t cut production based on current prices, an unidentified official from Kuwait Petroleum Corp. said, according to Platts. A Libyan OPEC official also said he didn’t see a reason for a reduction, while Algeria’s oil minister, Chakib Khelil, said he didn’t expect crude prices to fall much below $60 a barrel, the Platts report said.
Nigeria, the sixth-biggest producer in OPEC, downplayed its reduction. Levi Ajuonuma, a spokesman for state-run Nigerian National Petroleum Corp., said the nation’s decision was part of a “routine” seasonal change in supply. The nation in August produced 2.2 million barrels a day, according to Bloomberg estimates.
Peak Season
OPEC members normally raise production for the fourth quarter of the year, which represents the peak season for demand as refiners make fuels for the Northern Hemisphere winter.
Crude oil futures for November delivery on the New York Mercantile Exchange fell 0.8 percent to $62.48 a barrel at 9:31 p.m. London time. The price, up 2.4 percent this year, climbed as high as $64 after earlier reports of cutbacks.
OPEC doesn’t pay much attention to individual quotas for its members, with some pumping more than allowed, and the group didn’t mention quotas in the statement from its meeting earlier this month. Quotas for individual members have been treated with “benign neglect,” Daukoru told reporters on Sept. 11. Iraq is the only OPEC member without a production limit.
Daukoru, who is also the Nigerian oil minister, has been in contact with other members of the 11-nation producer group by telephone, as previously planned, OPEC spokesman Omar Farouk Ibrahim said today.
- The OPEC cutting oil production….should be in small phases…let’s see what is the next development in the oil prices
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