OPEC Lowers Quota But Not Production
OPEC has decided to leave its current quota on oil production in force until February 1, 2007, when it will cut production by 500,000 barrels per day. Analysts say that OPEC is trying to make the maximal profit, as the market jumped immediately after the announcement. January oil futures rose by $1.13 to $62.46 per barrel of Brent.
Yesterday's meeting, OPEC's 143rd, took place in Abuja, Nigeria, behind closed doors. Before the meeting, OPEC representatives admitted that the world market was gutted with oil. There was no consensus on what to do about that disbalance, however. Indonesia, Libya, Nigeria and Venezuela favored further reduction of the quota. Algeria, Iran, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates also wanted a reduced quota, but also wanted less disciplined members of the cartel held to previous agreements.
OPEC decided to reduce its quota by 1.2 million barrels per day on October 20. The total quota (without Iraq) was to be 26.3 million barrels per day. However, according to the International Energy Agency and the U.S. Energy Administration, the reduction in oil production in November was only 500,000-780,000 barrels per day. Thus, yesterday's decision allows exporters countries to ignore the October decision until the end of the heating season in the northern hemisphere.
Analysts expressed doubt that the Abuja meeting would have along-term effect on oil prices. “The effect from such decisions is very short-term as a rule,” Alexander Ershov of the Argus informational and pricing agency told Kommersant. He doubted that exporters would curtail production as long as the price of oil remained over $60 a barrel. The unusually warm winter in Europe and slowing economic growth in the United States may lead to lower oil prices, however.
www.commersant.com
All the Article in Russian as of Dec. 15, 2006
|
