Opec defers production cut

Oil prices rise as cartel announces output squeeze from February.

The Opec decision was confirmed by the oil ministers at a meeting in the Nigerian capital Abuja on Thursday
The Opec decision was confirmed by the oil ministers at a meeting in the Nigerian capital Abuja on Thursday
Light sweet crude for January delivery rose $1.11 to $62.48 a barrel on the New York Mercantile Exchange. Brent crude for January, which expires at the close of trading on Thursday, was up 90 cents at $62.23 a barrel.
 
The bump in oil, pushed up several large energy companies’ stock prices. Shares of Exxon Mobil Corp. gained 93 cents to $78.29 on the New York Stock Exchange, where shares of Royal Dutch Shell rose 41 cents to $71.29.
 
Meanwhile, shares of fuel-dependent airlines fell, though the drop may partly reflect profit taking after a steady run up that followed excitement about industry consolidation. Shares of American Airlines parent AMR fell $1.28 to $31.37 on the NYSE, while those of JetBlue Airways slid 36 cents to $13.79.
 
The decision by the Organisation of Petroleum Exporting Countries was confirmed by Edmund Daukoru, the Nigerian president and oil minister, along with ministers from other member nations who met in the Nigerian capital, Abuja.
 
With world inventories high but moving downward and the coldest days of the northern hemisphere winter still ahead, the move was intended to come across as a compromise – meant to keep markets and consumers calm at least in the short term.
 
It also left a possible window for the organisation to decide against a cut in February should demand spike, moving prices sharply upward.
 
The disagreement within Opec over whether further reductions in output were needed reflected uncertainty over demand, worries that inventories are too high and chafing over the shrinking US dollar that makes each barrel of crude worth less to Opec members because the currency decline reduces their purchasing power in Europe.
 
On Wednesday, the US energy department released data showing a 4.3 million barrel drop in US crude oil inventories last week, while the International Energy Agency said in its monthly report that stockpiles of crude in industrialised nations fell by 40 million barrels in October – evidence that global inventories are tightening.
Source : News Agencies

Related

George Bush, the US president, has warned the oil-producing countries that high crude oil prices could wreck economies and reduce demand for their products.

23 Oct 2006

Crude oil futures have stabilised after Opec cut production by more than expected as the cartel sought to reverse recent heavy price falls in an over-supplied market,  dealers said.

20 Oct 2006

Opec ministers are meeting in the Qatari capital of Doha to finalise the organisation’s first output cut since 2004.

19 Oct 2006

Oil prices have risen back above $60 a barrel on the expectation that producers will cut output by one million barrels a day.

5 Oct 2006
More from News
Most Read