[lbo-talk] OPEC reportedly agrees to production cut

[Marvin Gandall]

(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.