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OPEC is worrying about Falling OIL price as shown below.
Planning to cut oil production in 3mo. It seems that they are used to higher oil price, not in $40 or in $20.

What if someone invents brilliant alternative energy resources, then oil price could go to $10? Well, we need another Edison who will invent efficient energy resource soon.






http://www.bloomberg.com/apps/news?pid=20601072&sid=aR6tArgN0Ptk&refer=energy

OPEC to Consider Production Cuts to Bolster Crude Oil Prices

By Stephen Voss and Andy Critchlow

Dec. 11 (Bloomberg) -- OPEC, the producer of 40 percent of the world's oil, is considering its second production cut in three months to prevent a price drop early next year.

Officials from Venezuela and Iran said within the past two weeks that the group should reduce supply because of rising inventories. The representatives from Qatar and Nigeria said the U.S. dollar's 11 percent drop against the euro this year is eroding the purchasing power of OPEC's dollar-based revenue.

The biggest oil exporter, Saudi Arabia, said on Dec. 1 that stockpiles are too high. OPEC convenes this week in Abuja, Nigeria, its first conference in Africa's largest oil-producing nation since 1972.

A slide in prices from a July record of $78.40 a barrel in New York spurred the Organization of Petroleum Exporting Countries to agree in October to restrain production for the first time in 2 1/2 years. Oil last week closed at $62.03.

``OPEC doesn't need to cut supply immediately for the winter, but come February, they will need a cut,'' said Leo Drollas, deputy executive director of the London-based Centre for Global Energy Studies. ``Preparing the ground by announcing a cut now for February would make some sense.''

The group is seeking to avoid a surge in inventories that would prompt a drop in prices after winter ends in the Northern Hemisphere.

``The market is out of balance significantly,'' Saudi Arabian Oil Minister Ali al-Naimi told reporters in Cairo on Dec. 1. He said 100 million barrels of inventories needed to be removed from the market. U.S. crude stockpiles were almost 340 million barrels at the start of this month.

OPEC `Stuck'

``They are stuck between the price, which is pretty good, and this issue about stockpiles, which they find too high and are still building,'' said Frederic Lasserre, head of commodities economics research at Societe Generale SA in Paris.

OPEC will ``go for a cut,'' the group's president and Nigerian Oil Minister Edmund Daukoru, who will host the 11-member organization's meeting in three days, said in Abuja on Dec. 8.

Oil has been above $50 a barrel for the past 18 months. The retreat from July's record occurred as tensions eased between the West and Iran over the Islamic nation's nuclear research program. A benign hurricane season in the oil-producing U.S. Gulf of Mexico helped drive down the price of crude.

Production Cuts

The group agreed to cut production by 1.2 million barrels a day as of Nov. 1. OPEC has so far made about half the promised target. Excluding Iraq, which is excused from the accord, OPEC's November crude output fell to 26.97 million barrels a day, down 535,000 barrels from October, according to data compiled by Bloomberg.

Global oil consumption will decline 2 million barrels a day in the second quarter from the first, according to the International Energy Agency in Paris. The seasonal drop reflects less need for winter heating fuels.

``They won't decide on a cut to be implemented immediately, they will talk about a cut in the first quarter,'' Lasserre said. They will remain ``vague on the exact timing.''

Some OPEC ministers said the meeting may result in a second round of reductions.

``The cut could be up to 500,000 barrels a day,'' Venezuelan Oil and Energy Minister Rafael Ramirez said Nov. 30.

Lasserre said OPEC would risk its credibility and ability to influence the market by announcing new cutbacks before the first round is completed.

`Everyone Is Concerned'

Crude prices are about six times higher than they were at the end of 1998. During the past two years, booming demand, particularly in China, has allowed OPEC members to pump as much as they can.

The dollar last week fell to its lowest against the euro since March 2005 on concern the U.S. economic expansion is slowing. A weaker U.S. currency hurts oil exporters because sales are mostly transacted in dollars. The currency has lost about 5 percent against the euro since Oct. 13, when it reached the highest level since July.

``Everyone is concerned'' by the drop, Qatari Oil Minister Abdullah Bin Hamad al-Attiyah said this month in Abu Dhabi.

OPEC may consider making Angola a member when it meets. Angola, which pumps about as much oil as Algeria, last month said it wants to join OPEC.

Angola's oil minister, Desiderio Costa, will attend the meeting as an observer. If successful, the country would be the first new member since Gabon joined in 1975. Gabon left in 1994.

``Economically it doesn't make sense to join, but politically if they want to sit at the big table then that's a good motivation,'' said Drollas.

To contact the reporters on this story: Stephen Voss in London at [e-mail] ; Andy Critchlow in Dubai at at [e-mail]

Last Updated: December 10, 2006 19:05 EST