Oil hits 2-year low.
LONDON, Nov 6 (Reuters) - Oil prices hit a two-year low despite plans by OPEC producers to reduce supply again in the face of slowing global demand. Prices have now slumped by 31 percent since September 10th the day before suicide air attacks on the United States darkened an already gloomy economic outlook. U.S. light crude lost 24 cents to $19.78.
OPEC ministers lining up to endorse the cartel's fourth output cut this year, ahead of a their November 14 meeting in Vienna, have made little impression on a market focused instead on poor demand prospects. "Around one million barrels per day is being talked about to ease and offset overproduction," Venezuelan Oil Minister Alvaro Silva said late on Monday.
"The consensus is quite advanced but it is not fixed. We are holding bilateral meetings, checking figures and the final decision will be taken within OPEC." Some dealers now are saying that OPEC may need to cut more than the heavily trailed million barrels daily if it wants to prop up prices. So far nothing concrete has emerged from OPEC's ranks to suggest that a larger cut is being contemplated.
OPEC continues to target a central $25 price target but its crude on Monday was valued at just $17.81, a two-year low. "If the world economy cannot absorb a huge amount of oil, then why would you want to produce it?" a source close to the Saudi oil ministry said on Tuesday. A new cut would take OPEC supply limits below the levels of April 1999, when the cartel completed a series of curbs that eventually lifted oil from $10 to $35 a barrel. OPEC already has sliced 3.5 million bpd this year, reducing output quotas for 10 members by 13 percent to 23.2 million bpd. Despite its efforts prices remain weak partly because speculators are betting that weak demand will keep stocks plentiful even if OPEC withdraws supply.
Rising supply from non-OPEC exporters such as Mexico, Angola and Russia has not helped. Russia's Energy Ministry on Monday said exports for the first 10 months of the year rose to 3.04 million bpd from 2.82 million in the same period last year. OPEC has been lobbying oil exporters outside of the cartel's umbrella to join any further supply curbs, but so far only tiny Oman has pledged support. But Saudi Arabia is not ready to give up yet. Oil Minister Ali al-Naimi is expected to visit Russia and Norway ahead of the November 14 meeting.
((London newsroom))
Tuesday, 6 November 2001 14:42:25
