[lbo-talk] OPEC reportedly agrees to production cut

Marvin Gandall marvgandall at videotron.ca
Wed Oct 11 09:02:31 PDT 2006


(Those who suggest that the political machinations of the Bush administration have had more to with falling oil prices than economic and geopolitical considerations have focused on this summer's rejigging of the Goldman Sachs commodity index than on the Saudis' dithering over an OPEC production cutback - particularly the timing of such a move - even though the latter is where US influence on the oil market has historically been most evident. The OPEC cuts are slated to begin at the end of October so that the impact of any price bounce will be felt after the election, not before. It will be interesting to see whether GS follows suit by restoring the weighting of gasoline futures in its commodity index, but even so it wouldn't follow that its motives have been driven more by politics rather than speculation on the price outlook.)

OPEC to Cut Global Output By One Million Barrels a Day

Associated Press October 11, 2006 7:10 a.m.

ABUJA, Nigeria -- OPEC will cut global production by one million barrels a day to boost prices, Nigerian oil minister and OPEC president Edmund Daukoru said Wednesday.

"The cut itself is agreed," Mr. Daukoru told reporters after a cabinet meeting in the Nigerian capital, adding the cuts would begin at the end of the month.

Mr. Daukoru said members of the producing cartel were still working out how to share out the cuts, but were "nearing consensus." Mr. Daukoru's comments followed a slew of reports attributed to anonymous sources from member countries who said the cartel plans to trim its daily production by one million barrels.

Mr. Daukoru had said last week that OPEC was considering holding an emergency meeting before its scheduled Dec. 14 conference to discuss what to do about falling prices.

Oil prices have fallen sharply on global markets in recent weeks from their mid-July high of $78.40 on the New York Mercantile Exchange. On Wednesday, light, sweet crude for November delivery was down 42 cents at $58.10 a barrel.



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