Dubai (Platts)--24Nov2008

OPEC needs to cut its crude production by a further 1 million b/d at its
December 17 meeting in Oran, western Algeria, an OPEC source said Monday.

The source, speaking on condition of anonymity, said the problem was less
a question of oversupply than of consumer inventories which he described as
being, at 55 days of forward cover in OECD countries, "at the high end."

He stressed the importance of full compliance with any reduction. "It has
to be an actual cut," he said.

OPEC is unlikely to be able to evaluate fully the level of compliance
with the 1.5 million b/d output cut implemented at the beginning of this month
until mid- or even late December, the source said. OPEC kingpin Saudi Arabia
had cut output by around 1 million b/d since the summer when it produced 9.7
million b/d and is now pumping around 8.7 million b/d, he said.

The source said OPEC was concerned about the decline that has seen
international crude benchmarks plummet from record highs of more than
$147/barrel in July to around $50/b now, but that this was compensated to some
extent by a recovering US dollar, falling inflation and the price decreases in
other commodities and basic materials such as steel.

OPEC will hold what it is calling a "consultative" meeting in Cairo,
Egypt, on Saturday. Iran and Venezuela want OPEC to cut output again by at
least 1 million b/d at the Cairo talks, but OPEC president Chakib Khelil has
said a Cairo decision on output is unlikely although ministers may come up
with "recommendations" for the December 17 meeting in Oran.