Saudis warn again on OPEC cuts, but crude prices dip
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Saudi Arabia is still talking tough on OPEC oil output cuts as the cartel gathers in Algeria today, but crude prices are moving marginally lower despite the warning.
From Bloomberg News:
Saudi Arabia, the world’s largest oil exporter, said OPEC will cut production by about 2 million barrels a day at tomorrow’s meeting. ‘Supply is somewhat in excess of demand, inventories are also higher than normal,’ Saudi Arabian Oil Minister Ali al-Naimi told reporters today after arriving in Oran, Algeria. ‘To bring things in balance there will be a cut in production of about 2 million barrels.’ The Organization of Petroleum Exporting Countries, supplier of more than 40% of the world’s oil, is gathering for the fourth time in as many months after crude prices plunged more than $100 from July’s all-time high. Output targets for 11 members with quotas stand at 27.3 million barrels a day. ‘This might backfire,’ said Robert Laughlin, a senior broker at MF Global Ltd. in London. ‘OPEC is coming out so aggressively about what the outcome of the meeting is going to be,’ and that ‘may downplay the impact of the decision tomorrow.’
A cut of 2 million barrels would be about 7.3% of current output targets.
Crude futures in New York were trading at $44.08 a barrel at about 10 a.m. PST, down 43 cents from Monday. Oil bounced from a four-year low of $40.81 a barrel on Dec. 5 to a high of $47.98 last Thursday, but has since pulled back amid more grim global economic data.
-- Tom Petruno