OPEC expected to cut daily output by 1 million barrels
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NEW YORK - OPEC, supplier of more than 40 percent of the world's oil, may disregard pleas from consuming nations on the brink of recession by cutting output at least 1 million barrels this week, a Bloomberg News survey showed.
Thirty of 33 analysts surveyed Monday and yesterday forecast the Organization of Petroleum Exporting Countries will cut output by 1 million barrels a day or more at a meeting Friday in Vienna. That's more oil than Australia consumes. OPEC also may signal plans for an additional reduction of at least 500,000 barrels by early 2009.
US crude for November delivery, which expired yesterday, settled down $3.36 at $70.89 a barrel, on the New York Mercantile Exchange.
"It would be a surprise if they didn't cut," said Robert Johnston, director for global energy at Eurasia Group in Washington. "The Saudis might have preferred waiting until after the US elections, but they're worried by the velocity of the price drop and feel pressure from other members with budget sensitivities."
The Paris-based International Energy Agency, which coordinates energy policy in industrial countries, has warned an OPEC supply cut would exacerbate the global economic slump.
OPEC agreed at a Sept. 10 meeting to a limit for 11 members of 28.8 million barrels a day, unchanged from their previous targets. That was 500,000 barrels a day lower than the group's July output. Members left Vienna with an agreement to next gather on Dec. 17 in Oran, Algeria.
The group moved the meeting forward twice this month because of falling prices. On Oct. 9 OPEC set a Nov. 18 meeting and on Oct. 16 it became Oct. 24.
Crude oil in New York has fallen 52 percent since reaching a trading record $147.27 a barrel on July 11.
"This meeting is going to be very difficult for OPEC," said Antonio Szabo, chief executive of Houston-based consultant Stone Bond Technologies. "They have to balance consumer needs and perceptions with their needs, different views while preserving some semblance of unity."
Iran, OPEC's second-largest producer, said it favors a cut of between 2 million and 2.5 million barrels a day if demand declines. Besides Iran, ministers from Venezuela, Algeria, Libya, and Qatar have said the group will have to cut supplies.
