OPEC Decreases Oil Production By 2 Million Barrel a Day, in an Attempt to Stop Falling Prices

OPEC Decreases Oil Production By 2 Million Barrel a Day, in an Attempt to Stop Falling Prices

ccun.org, December 17, 2008

Editor's Note:

OPEC oil ministers meeting in Algiers agreed to cut oil production by two million barrels a day, in a attempt to prevent oil prices from falling down more, on the short run, and to cause prices to go up on the long run.

Oil prices have fallen by more than one hundred dollars in the last five months, after reaching higher than $140 per barrel.

The sharp rise and the sharp decline of oil prices is evidence to the fact that prices are not decided by market forces. Rather, these are decided by brokers who operate on non-economic variable.

One justification for the sharp rise in oil prices was the argument that the world has reached the apex of oil production. However, the sharp decline refutes this false argument. If oil reserves are declining, then prices will continue rising.

Oil companies made trillions of dollars in profit.

The argument was also used to justify the US invasion of Iraq.

The American people ended up being looted by oil companies, banks, energy companies, and now automakers.

OPEC extraordinary meeting opens amid output cut expectation

2008-12-17 17:19:47

ORAN, Algeria, Dec. 17 (Xinhua) --

The Organization of Petroleum Exporting Countries (OPEC) convened the 151st extraordinary ministerial meeting here Wednesday in expectation of an output cut decision to shore up the plunging oil prices.

Ministers from the 13-member oil cartel gathered in northwestern Algerian coastal city of Oran, exploring an agreement to address the slide of oil prices, which have shrunk more than two thirds from record mid-July highs above 147 U.S. dollars in the face of a global economic downturn.

Algerian President Abdul Aziz Boutefliqa and representatives from non-OPEC countries of Russia, Oman, Azerbaijan and Syria also attend the one-day event.

Boutefliqa said OPEC faces the challenge of stabilizing the oil market. He called for the cohesion among all OPEC members to stabilize the oil prices so as to reduce the impact of the global financial crises on the oil exporting countries.

"The actual oil prices have already caused the slide of our revenues and a slowdown of the world economic activities which have a direct impact on the growth of the oil demand," he said.

"This is why I support OPEC's decision made in October to reduce the production to stabilize the market," he added.

During the past four months, the cartel had made two coordinated cuts to shore up the plunging prices. A modest cut of 520,000 bpd was made on Sept.10 and then a 1.5-million one was announced on Oct. 24 in its Vienna meeting.

However, the two decisions both failed to revive the falling prices. Later at its consultative meeting in Cairo on Nov. 29, OPEC decided to keep the current crude oil output until its meeting in Algeria.

After hitting 40.50 dollars a barrel on Dec. 5, the lowest in four years, the crude continued to be traded at lows so far this month, sparking panic among the cartel's members about their slumping revenues.

Many analysts expect a production cut of as much as 2 million barrels a day this time so as to buttress the prices and stabilize the oil market.

Saudi Oil Minister Ali al-Na'imi said before the meeting that members of the OPEC have reached consensus on cutting the oil production by 2 million barrels per day, the official Algerian Press Service (APS) reported.

Meanwhile, the oil bloc has appealed for help to reduce output from non-OPEC members. Russian President Dmitry Medvedev has said that his country was ready to join hands with OPEC to stem the plunging prices and could even become part of the oil cartel if membership were in Moscow's interests.

Prior to the Wednesday meeting, OPEC members also held a preparatory meeting on Tuesday, with all parties narrowing their differences on the level of output quotas to be slashed.

OPEC comprises Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela, but Indonesia has suspended membership and officially leaves the cartel at the end of 2008.

Oil tumbles after Fed rate cut

2008-12-17 05:27:09

NEW YORK, Dec. 16 (Xinhua) --

Crude oil tumbled Tuesday as the U.S. Federal Reserve interest rate cut revived investors' concern about slumping demand during the economic recession.

Light, sweet crude for January delivery fell 91 cents to settle at 43.60 U.S. dollars a barrel on the New York Mercantile Exchange (NYMEX).

The Fed decided Tuesday to cut its target for overnight interest rates from 1 percent to zero to 0.25 percent. The Fed said in its statement that the economy remains weak and it will continue to bring unconventional measures to boost economic activities.

The dramatic interest rate cut sent the message to investors that the recession is still deepening and energy demand is unlikely to recover anytime soon. NYMEX crude futures slid from day's high to as low as 42.56 dollars a barrel.

The possibility of a severe production cut by OPEC is still weighing on the market. The oil cartel will meet in Algeria Wednesday to discuss how much output it should slash to prevent oil prices plunging further.

In London, Brent crude for February delivery fell 63 cents to 46.51 dollars a barrel on the ICE Futures Exchange.

Editor: Yan

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