OPEC may cut crude output again in December: secretary-general

Paris (Platts)--3Nov2006

OPEC may cut production further when it meets on December 14 if the 1.2
million b/d output cut agreed by ministers on October 19 does not result in a
more balanced market, OPEC secretary general Mohammed Barkindo said Friday.
"I would not be surprised if they cut more," Barkindo said.
OPEC, which pumps more than a third of the world's oil, announced at at
emergency meeting on October 19 it would cut 1.2 million b/d of production
from November 1, but so far that has failed to halt the drop in prices.
The cut was made from a 27.5 million b/d baseline, representing actual
September output by the ten OPEC members bound by output agreements. Following
the cut, a new combined output limit of 26.3 million b/d came into force on
November 1. The move came as oil prices dropped more than 25% since a mid-July
peak above $78/barrel.
OPEC is due to meet again in the Nigerian capital Abuja on December 14
and several ministers, including Saudi Arabia's oil minister Ali Naimi,
have indicated they favor a further output cut at that time if necessary.
Venezuelan Energy Minister Rafael Ramirez on Wednesday repeated his
previous call for lower output and said OPEC should cut an extra 300,000 b/d
of production at its December meeting to ensure adequate prices.

COLD WINTER COULD BE MAJOR FACTOR
Barkindo, however, warned that a colder than expected northern hemisphere
winter could increase demand for heating fuel and dictate the direction of the
market.
"The weather is going to be a major factor. I would not be surprised if
it comes with a vengeance and lasts much longer into spring. That would mean
mopping up the middle distillates," he said.
He also said the US Department of Energy's report of a 2 million b/d
build in US crude stocks to 343.3 million barrels for the week ended October 7
was less than the market expected. "The market was expecting something higher
than that," he said.
At 0754 GMT, the New York Mercantile Exchange's front-month December
futures contract traded at $57.87/barrel, a cent below Thursday's close.

For more OPEC news, visit Platts OPEC Guide at
http://www.platts.com/Oil/Resources/News%20Features/opec/index.xml


 

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