OPEC Slashes Output But Oil Prices Tumble

OPEC’s actions aren’t stopping the tumble and pissing some people off.

AFP: Oil prices plunged to the lowest points for 17 months on Friday, as recession fears sparked renewed demand concerns, despite news that OPEC will cut oil output by 1.5 million barrels per day.

Brent North Sea crude for December delivery slumped to 61.00 dollars per barrel, the lowest point since March 2007.

New York’s main contract, light sweet crude for December delivery, tumbled to 62.85 dollars a barrel, which was last seen in May 2007.

…The organisation of the Petroleum Exporting Countries said Friday that they would slash output from November 1 in an attempt to stabilise plunging oil prices, despite a looming worldwide recession.

Analysts had expected OPEC to cut its daily output by at least one million barrels per day as a global economic slowdown amid a worsening financial crisis slashes demand for energy.

But did that really matter?

In later trade on Friday, New York crude was 4.59 dollars lower at 63.25 dollars per barrel and Brent oil slid 4.30 dollars to 61.62.

“Crude oil is heading lower again… on fears that the (OPEC) cut might not be sufficient to compensate the shortfall of demand due to a global recession,” said Dresdner Kleinwort analyst Peter Fertig.

…OPEC, which produces 40 per cent of world crude, announced a cut to production in a bid to support crude prices which “have witnessed a dramatic collapse — unprecedented in speed and magnitude,” according to an official statement.

Crude futures in London and New York have plunged close to 60 per cent from record highs of above 147 dollars a barrel reached only three months ago when supply concerns sent prices soaring.

The crude market was also dampened as the dollar strengthened against the euro and pound. A stronger US unit tends to sap demand for dollar-priced crude, which becomes more expensive for buyers holding weaker currencies.

Some people aren’t thrilled with OPEC.

…British Prime Minister Gordon Brown said on Friday that he was “disappointed” by OPEC’s decision to cut production and urged oil producers to show a responsible attitude in the current crisis, his spokesman said.”The current economic crisis affects us all and we should all take responsibility not to undermine efforts that have been made to stabilise the economy.”

OPEC begs to differ.

The oil cartel’s president Chakib Khelil said the production cut would not hurt the global economy.

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