SINGAPORE – The Organisation of the Petroleum Exporting Countries (Opec) has agreed informally on the need to cut output by at least 1 million barrels a day (bpd) to keep the price of its crudes above US$50-US$55, the Financial Times reported yesterday without naming sources.
An Opec delegate told Reuters yesterday that “the direction and spirit are there” for Opec to make a significant cut in supply, but did not give further details. Oil futures rallied on the newspaper report but later pared some gains, with US crude up 31 cents at US$59,72 a barrel by 0640 GMT after earlier hitting a high of $60,20.London Brent crude rose 15 cents to US$59,37.Kuwait, Iran and Libya have informally agreed to join Nigeria and Venezuela in cutting back, while the United Arab Emirates is likely to do so also, the FT quoted “Opec insiders” as saying, despite cartel kingpin Saudi Arabia’s unease over the plan.It said the majority of the 11-member cartel supported a voluntary reduction over the coming weeks in a concerted effort to stem a slide that has wiped nearly US$20 or almost 25 per cent off the price of crude since early August.A deal could be ratified at its next meeting in mid-December, the FT said, although talks now were “fluid”.The report did not specify how the cut would be divided among the Opec members nor exactly when it would begin.An Opec spokesman could not immediately be reached for comment.The FT reported that Saudi Arabia, the world’s biggest exporter and most influential Opec member, was unhappy with the broad move towards voluntary cutbacks and would prefer a public position when the group meets in the Nigerian capital Abuja.However, the FT noted that Saudi Arabia had already quietly cut production by about 200 000 bpd over the past two months.The Opec delegate told Reuters that while Saudi Arabia had not commented on the market so far, the fact that it hiked the price of its heavier crude to Europe indicated the kingdom may be cutting supply.Kuwaiti Oil Minister Sheikh Ali al-Jarrah al-Sabah raised the chance of broader action on Wednesday, telling Reuters that Kuwait may also cut back if prices continued to fall sharply – the first of the powerful Gulf producers to take that position.”Opec is going to defend a price floor for its oil of US$50-US$55 a barrel,” the FT quoted one Opec official as saying.The Opec basket of crudes stood at US$55,27 a barrel on Tuesday and is typically around US$4-US$5 below Western benchmarks.Most Opec members have avoided putting any specific number on the price at which they would cut, fearful that setting a specific level too high might upset consuming countries.”The news shouldn’t be too much of a surprise.Obviously, Opec has seen that the world economy can keep going at US$65 to US$75, so they don’t see any reason why prices should fall too much further,” said Andrew Harrington, a resource analyst at ANZ Bank.Nampa-ReutersOil futures rallied on the newspaper report but later pared some gains, with US crude up 31 cents at US$59,72 a barrel by 0640 GMT after earlier hitting a high of $60,20.London Brent crude rose 15 cents to US$59,37.Kuwait, Iran and Libya have informally agreed to join Nigeria and Venezuela in cutting back, while the United Arab Emirates is likely to do so also, the FT quoted “Opec insiders” as saying, despite cartel kingpin Saudi Arabia’s unease over the plan.It said the majority of the 11-member cartel supported a voluntary reduction over the coming weeks in a concerted effort to stem a slide that has wiped nearly US$20 or almost 25 per cent off the price of crude since early August.A deal could be ratified at its next meeting in mid-December, the FT said, although talks now were “fluid”.The report did not specify how the cut would be divided among the Opec members nor exactly when it would begin.An Opec spokesman could not immediately be reached for comment.The FT reported that Saudi Arabia, the world’s biggest exporter and most influential Opec member, was unhappy with the broad move towards voluntary cutbacks and would prefer a public position when the group meets in the Nigerian capital Abuja.However, the FT noted that Saudi Arabia had already quietly cut production by about 200 000 bpd over the past two months.The Opec delegate told Reuters that while Saudi Arabia had not commented on the market so far, the fact that it hiked the price of its heavier crude to Europe indicated the kingdom may be cutting supply.Kuwaiti Oil Minister Sheikh Ali al-Jarrah al-Sabah raised the chance of broader action on Wednesday, telling Reuters that Kuwait may also cut back if prices continued to fall sharply – the first of the powerful Gulf producers to take that position.”Opec is going to defend a price floor for its oil of US$50-US$55 a barrel,” the FT quoted one Opec official as saying.The Opec basket of crudes stood at US$55,27 a barrel on Tuesday and is typically around US$4-US$5 below Western benchmarks.Most Opec members have avoided putting any specific number on the price at which they would cut, fearful that setting a specific level too high might upset consuming countries.”The news shouldn’t be too much of a surprise.Obviously, Opec has seen that the world economy can keep going at US$65 to US$75, so they don’t see any reason why prices should fall too much further,” said Andrew Harrington, a resource analyst at ANZ Bank.Nampa-Reuters
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