Date:11/09/2008 URL: http://www.thehindu.com/2008/09/11/stories/2008091156001700.htm

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OPEC to cut overall output

VIENNA: OPEC (Organization of Petroleum Exporting Countries) oil ministers on Wednesday agreed to trim the overall output by more than five lakh barrels a day in a compromise meant to avoid new turmoil in crude markets while seeking to bolster falling prices.

The news sent oil prices upward. Light, sweet crude for October delivery rose 97 cents to $104.23 a barrel in electronic trading on the New York Mercantile Exchange. But benchmark crude fell back in later trading, fetching only 8 cents more at $103.34 by afternoon in Dubai and reflecting market conviction that the cut would not seriously affect supply.

The steady market also showed lack of concern over news that Russia and OPEC had agreed to sign a memorandum of understanding that would increase bilateral cooperation in energy issues.

Russia produces around 11 per cent of the world’s oil and OPEC 40 per cent and any tight coordination between the two could potentially reduce importers options on where to go for their crude.

The OPEC announcement to scale back output reflected the organization’s efforts to cover all bases in an oil market.

Oil prices had lost more ground on Tuesday ahead of the decision, falling $3.08 to settle at $103.26 on the Nymex, the lowest settlement price since April 1. — AP