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OPEC GATHERS IN EMERGENCY MEETING AS OIL PRICES EVAPORATE; TALK OF 2M BARREL PRODUCTION CUT (Algeria)

Posted by Gilmour Poincaree on October 24, 2008


Last update: October 23, 2008 – 1:28 PM

by George Jahn, Associated Press

VIENNA, Austria – Iran and Venezuela on Thursday urged OPEC to quickly slash output and stem a Workers check the size on pipes at the Freeze Wall test site at Shell Oil Company's Mahogany Oil Shale Research Project near Meeker, Colo., on Wednesday, May 31, 2006. Shell Exploration & Production Co., which is poised to snap up a 160-acre experimental lease on federal lands rich in oil shale, gave a delegation of senators a progress report Wednesday on its efforts to bake shale oil from the ground in western Colorado (AP Photo - Ed Andrieski)steep slide in prices that has left crude at its cheapest in 15 months — and some member countries scrambling to balance their books.

But OPEC’s power to raise prices by cutting supply may be fading amid a global economic crisis that has evaporated demand for oil.

The latest weekly report from the U.S. Department of Energy shows that demand has fallen in 38 of the past 42 weeks. U.S. demand is down nearly 10 percent during the past four weeks year on year. The U.S. still consumes one out of every four barrels of oil produced.

“This is not a supply issue,” said trader and analyst Stephen Schork. “OPEC can affect supply but they can’t touch the demand side, which right now is a house of cards.”

Iranian oil minister Gholam Hossein Nozari told reporters, on the eve of an emergency OPEC meeting to address evaporating prices, that a cut of “two million (barrels per day) will stabilize” the market. And Rafael D. Ramirez, his Venezuelan counterpart, also left little doubt on where he stood.

“We have to take some action now, now,” said Ramirez, telling reporters that the 13 OPEC oil ministers meeting Friday will reach “consensus to take a very, very, very fast action.”

Both he and Iraq’s oil minister said their nations may be forced to rethink or cut spending next year.

Other oil ministers of the Organization of Petroleum Exporting Countries also said output cuts had to be on the table during their meeting Friday — but were well aware that if production is tightened too much, the resulting price spikes could knock a wobbling global economy even further out of kilter.

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PUBLISHED BY ‘STAR TRIBUNE’ (Argélia)

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