Prices rise ahead of an emergency meeting expected to consider supply cuts after a 45% drop in value.
Oil cut dilemma for Opec
VIENNA // Opec ministers are expected to reduce oil output to mop up a forecast glut on world markets at a meeting in the Austrian capital today, despite criticism that the group is inflicting further harm to a vulnerable world economy. Gordon Brown, the British prime minister, has labelled Opec's likely output cut as a "scandalous" attempt to increase crude prices at a time of economic turmoil. But Mohammed bin Dha'en al Hamli, the UAE Minister of Energy, said the steep fall in oil futures, down by half in three months to below $70 a barrel yesterday, has worried exporting nations.
"We are concerned that the fall in prices has been very steep," Mr Hamli said upon arrival in Vienna yesterday for an emergency Opec meeting. Chakib Khelil, the Opec president and Algerian minister of energy and mines, said the group of 13 oil exporters "must take into account both consumers and producers" in weighing any changes to crude production, suggesting Opec may not cut output as abruptly as some traders expected earlier this week.
Lower production levels were needed to restore market stability in light of the world financial and economic crisis that had sharply reduced near-term prospects for global demand growth, he added. Mr Hamli declined to comment on Opec's likely course of action, but other member states have advocated an immediate reduction of at least one million barrels per day (bpd). Ali al Naimi, the Saudi minister of petroleum and mineral resources who is the most influential voice in the organisation, kept the markets guessing yesterday on his country's position.
"Who said anything about a cut?" he said when asked whether he backed a reduction. "Prices will be determined by the market." Prices fell $1 in response to his remarks but remained volatile throughout the day. By 7:15pm (Gulf time), West Texas Intermediate crude for December delivery stood at $68.50 a barrel after touching a low of $65.90. Oil markets rallied earlier this week on investor expectations that Opec would cut exports, with members citing volumes ranging from one million to three million bpd.