OPEC plans 'severe' cut in oil output
OPEC is planning a significant cut in its oil production quotas when it meets in Algeria tomorrow in an effort to pull crude oil prices up from current levels of below $50 per barrel.
The oil cartel, producer of about 40% of the world's oil, may make its biggest cut in a decade by lowering output by at least 2 million barrels per day (bpd). Wedesday's meeting will be the cartel's fourth in four months.
OPEC president Chakib Khelil said on December 11 that ministers had agreed that a ''severe'' cut is needed at the meeting tomorrow.
OPEC powerhouse Saudi Arabia has remarked that oil prices at $75 per barrel would be considered reasonable.
Attaining the $75-per barrel price target, however, could be difficult due to weak US oil demand as the global economy slows, according to market analysts.
''There is a real danger of oil going down to $30 a barrel unless OPEC acts boldly and decisively,'' an analyst was quoted saying.
Light sweet crude for January delivery in New York fell $1.77 to close at $44.51 per barrel on Monday night. Prices have plunged from a record of $147.27 in July.
The cartel agreed in October to reduce production by 1.5 million bpd, starting November 1.
Meanwhile, Goldman Sachs Group Inc. yesterday predicted oil prices to average $45 per barrel in 2009.
The investment bank forecast oil prices will average $35 per barrel during the first half of 2009 before rebounding to $50-60 per barrel in the second half of the year.