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OPEC cuts oil output

10 September 2008 12:09 (UTC +04:00)

Baku. Vugar Mustafayev - APA-Economics. Oil prices edged higher in Wednesdayâ€™s trading after OPEC members said the group would cut crude oil output by 520,000 b/d under a plan to roll back production to quotas set this time last year.
The move is a bid to halt sliding prices in what OPEC described as "over-supplied" conditions on global energy markets. Oil prices, which had ended at a five-month low on the New York Mercantile Exchange on Monday, stabilised in the wake of the announcement.
"The market is short oil, and this piece of fundamental news would unnerve the market," said Jonathan Barratt, managing director of Commodity Broking Service in Sydney. "It could arrest the fall in oil prices for an intermediate time."
Chakib Khelil, president of the OPEC, said the new target would cut output by 520,000 b/d from levels in July. Reports said the cutback would be phased in over the next 40 days.
Analysts said OPECâ€™s decision suggests that the group, which controls 40 percent of global output, views world oil markets as well supplied in the face of tepid demand growth and growing worries that recessionary forces could knock back consumption in coming quarters.
The announcement was also seen as a surprise after several key oil ministers, including Saudi Arabiaâ€™s Ali Naimi, said in recent days that the market remained healthy, with supply and demand broadly in balance.
Oil prices have fallen about 30 percent since climbing to a record US$147 a barrel in July.