OPEC need always to meet from time to time for increasing or decreasing oil production for stability interest of both producers and consumers.
Associated France Press (AFP) 20/10/2006
Oil prices edge ahead after OPEC cuts output
by Damien Steffan
LONDON (AFP) - World oil prices crept ahead as traders gave a cautious welcome to news that the Organization of Petroleum Exporting Countries has cut output by 1.2 million barrels per day.
New York's main contract, light sweet crude for delivery in November, added 22 cents on Friday to 58.72 dollars per barrel in electronic deals before the official opening of the US market. The contract expires at the close.
In London, Brent North Sea crude for December delivery added nine cents to 60.96 dollars per barrel in electronic trading.
OPEC oil ministers decided earlier Friday to slash its production by 1.2 million barrels per day (bpd) from November 1, blaming the move on an over-supplied market.
"The market is sceptical about the ability of the cartel to really implement a cut of 1.2 million," said Investec analyst Bruce Evers.
"It's going to take six weeks before we really know the amount that's really been taken off the market."
He added: "Whether countries like Indonesia, Libya or Venezuela will actually reduce their production further, remains to be seen."
A further cut may be required at the 11-nation cartel's next meeting in the Nigerian capital Abuja on December 14, Evers noted.
Ahead of its extraordinary meeting in Doha, and amid market uncertainty over the exact details of a reduction, OPEC had given the impression that the cut would be only one million bpd.
The cut will reduce actual production to 26.3 million bpd from 27.5 million bpd currently, which is below OPEC's official quota of 28 million bpd, in place since July 2005.
According to Barclays Capital analyst Kevin Norrish, the output decision would prevent crude prices falling much further.
"While it would be surprising if the recent high level of market scepticism and misunderstanding about OPEC were to disappear completely and rapidly, we believe that ministers have now put a fairly strong floor under prices," Norrish said.
There had been uncertainty over whether the powerful cartel would reduce output from the quota or current output levels -- which had helped to drive oil prices lower in recent weeks.
OPEC members had last week agreed in principle to a one million bpd cut as oil prices had fallen to below 58 dollars per barrel.
That marked a drop of more than 25 percent from record highs above 78 dollars struck in July and August, although prices have tripled since 2002.