OPEC ministers announce surprise output cut

OPEC ministers on Wednesday announced a surprise output cut following a fall in oil prices to just above $100 a barrel.

Oil rose by a dollar immediately after the announcement.

OPEC President Chakib Khelil said the group would in effect be cutting roughly half a million barrels per day (bpd) from the group's July output level over the next 40 days.

"I think if you do your own calculation properly, it will be a lowering of production by about 520,000 barrels per day," Khelil said.

After nearly five hours of debate, the Organization of the Petroleum Exporting Countries (OPEC) said it had returned to a production ceiling of 28.8 million barrels per day (bpd), previously in effect a year ago.

The meeting, which did not begin until late on Tuesday because of Ramadan fasting, had been expected to keep output targets unchanged.

But on Tuesday oil prices fell to a five-month low below $102 a barrel, about 30 percent below the all-time high of $147.27 hit on July 11.

OPEC's previous production target was 29.67 million bpd for the 12 members with output limits.

According to secondary sources, OPEC is estimated to be producing roughly 790,000 barrels per day bpd above that ceiling.

Oil jumps $1 as OPEC surprises with output cut

* U.S. crude futures jump $1 after OPEC agrees effective cut

* OPEC reverts to 28.8 mln bpd 2007 quota

* OPEC decision cuts 520,000 bpd vs July production

SEOUL, Sept 10 (Reuters) - Oil prices jumped more than $1 a barrel on Wednesday, reversing early losses after OPEC unexpectedly agreed to effectively cut production by just over 500,000 barrels per day (bpd) from July levels.

Most analysts had expected the producer cartel to maintain formal targets at its meeting in Vienna, although some had suggested they could tighten compliance in order to help stem a near 30 percent slump in oil prices since July.

U.S. crude for October delivery was up 54 cents at $103.80 a barrel by 0147 GMT, reversing earlier losses of more than $1 a barrel after OPEC decided to trim its production ceiling to 28.8 million barrels per day (bpd).

London Brent crude rose 46 cents to $100.80 after briefly dipping below $100 for a second day. Prices hit their lowest in five months on Tuesday.

"The boys at OPEC have thrown a surprise by cutting production.... I am amazed they have cut, and that the market reaction has been so lukewarm so far," said Edward Meir, analyst at brokers MF Global in New York.

"I expect that reaction to intensify as the day goes on.

OPEC President Chakib Khelil said after the nearly five-hour meeting that he still saw surplus oil supply building on the market by the end of the year and increasing in the first months of 2009.

"OPEC is basically cutting the amount which Saudi had increased. Oil prices jumped initially after the news but we are not surprised by the amount of the cut. I don't think the cut can actually stop the current downtrend in the oil market," said Susumu Ogasawara, a manager at Ace Koeki Co Ltd in Tokyo.

"The focus will shift back to falling demand and concerns about the global economy to pressure oil prices."

Later in the day traders will seek direction from U.S. inventory data, expected to show a fall in U.S. crude stocks by 4.4 million barrels in the week to Sept 5 after Gustav shut down fields, according to a Reuters poll of analysts.[EIA/S]

Gasoline stocks were seen falling by 4.2 million barrels and distillates by 2.7 million barrels in the data. (Reporting by Angela Moon; Editing by Louise Heavens)

OPEC decides to curb overproduction

OPEC oil ministers have decided to curb overproduction by more than 500,000 barrels.

The move is a compromise meant to avoid new turmoil in oil markets while at the same time reflecting OPEC attempts to prevent prices from falling too far. Crude prices have dropped nearly 30 percent since spiking to nearly $150 a barrel in July.

An OPEC statement issued after oil ministers ended their meeting early Wednesday said the organization agreed to produce 28.8 million barrels a day. OPEC President Chakib Khelil said that quota in effect meant that member countries agreed to cut back 520,000 barrels a day in overproduction.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

VIENNA, Austria (AP) — OPEC oil ministers have decided to curb overproduction by more than 500,000 barrels.

The move is a compromise meant to avoid new turmoil in oil markets while at the same time reflecting OPEC attempts to prevent prices from falling too far. Crude prices have dropped nearly 30 percent since spiking to nearly $150 a barrel in July.

An OPEC statement issued after oil ministers ended their meeting early Wednesday said the organization agreed to produce 28.8 million barrels a day. OPEC President Chakib Khelil said that quota in effect meant that member countries agreed to cut back 530,000 barrels a day in overproduction.

(This version CORRECTS overproduction curb to 520,000 barrels)

Opec agrees oil production curb

Opec has told its members to strictly limit their production to agreed quotas as Brent crude dipped below $100 a barrel for the first time since April.

After talks in Vienna, Opec president Chakib Khelil said the measures to curb over-production amounted to a cut of 520,000 barrels a day within 40 days.

North Sea Brent fell $4.54 to $99.04 on Tuesday before rising to $100.34, while US Brent fell $3.08 to end on $103.26.

Prices have sunk from a record of more than $147 a barrel seen in July.

The price has since fallen by nearly 30% as a global economic slowdown has reduced demand for oil.

Supply has also been increased in recent months by some Opec members - principally Saudi Arabia.

Meanwhile, Indonesia has said suspended its membership of Opec.

"The conference regretfully accepted the wish of Indonesia to suspend its full membership in the organisation and recorded its hope the country would be in a position to rejoin the organisation in the not too distant future," Opec said in a statement.

Compromise

After the late-night talks in Vienna, the group announced it had decided to "strictly" comply to the production ceilings agreed in September last year, which amount to 28.8m barrels a day excluding Indonesia and Iraq.

It linked the falling price of oil to falling economic growth, a stronger US dollar, easing geo-political tensions and greater supply.

Supply has also been increased in recent months by some Opec members

"All the foregoing indicates a shift in market sentiment causing downside risks to the global oil market outlook," a statement said.

The effect of the measures, according to Algerian Oil Minister Chakib Khelil, who chaired the meeting, will be a cut of about 520,000 barrels a day.

"Actions [to curb output] will be taken by members as soon as they can, that means in the next 40 days," he said.

Opec members will re-assess the situation when the meet again at the end of the year.

The BBC's Bethany Bell in the Austrian capital says the move is a compromise meant to avoid new turmoil in the oil markets, but it also reflects Opec's attempts to stop the recent falls in global prices.

OPEC to keep crude output at current level

The Organization of Petroleum Exporting Countries (OPEC) will hold its official crude oil production quota unchanged until mid-December, OPEC President Chakib Khelil emphasized before the 149th Ordinary Meeting held in Vienna late Tuesday night.

Traders in the oil options pit work at the New York Mercantile Exchange, September 9, 2008. Crude oil was trading around $103 a barrel at mid day after OPEC ministers were to hold a meeting and hurricane Ike was heading towards Gulf of Mexico oil platforms. (Xinhua/Reuters Photo) Photo Gallery>>>

The market is "well supplied" and should "maintain at a comfortable level," the Algerian Oil Minister said. he also said that "in all likelihood, we will do nothing before December."

The crude oil price has fallen nearly 30 percent from a record high price of 147 U.S. dollars since Jul. 11, mainly due to a rebound in the U.S. dollar and a drop in demand in some industrialized countries, like the United States and Japan, some experts said.

However, some other oil ministers still advocated that a reduction in output might be necessary if the oil prices continue to drop in the future. According to the statistic from the cartel's secretariat, the daily average crude oil prices slumped to 101.08 U.S. dollars per barrel on Monday, falling down to the five-month-lowest price since the start of April.

Saudi Arabia: OPEC output level contributes to "fairly well-balanced" market

VIENNA, Sept. 9 (Xinhua) -- Saudi Oil Minister Ai al-Nuaimi said here Tuesday that the international crude oil market is "fairly well-balanced" and that the current OPEC crude oil output is appropriate.

Ai al-Nuaimi said that OPEC had made great efforts to fulfill its objectives and stabilize the market. Therefore, the current market is "fairly well-balanced" and the "inventories are in a healthy position," he explained. Full story

UAE energy minister: OPEC to ensure well-supplied market

ABU DHABI, Sept. 8 (Xinhua) -- The Organization of Petroleum Exporting Countries (OPEC) will not change its fundamental policy of ensuring a well-supplied market at its upcoming ministerial meeting in Vienna, the energy minister of the United Arab Emirates(UAE) said on Monday.

The UAE Minister of Energy Mohammed bin Dhaen al-Hamli, who will lead the UAE delegation to the OPEC ministerial meeting on Tuesday, made the statement in an interview with the official Emirates News Agency. Full story

Oil price falls to below $100 per barrel barrel

The price of oil plunged closer to the psychologically important level of $100 per barrel yesterday, raising the prospect of lower inflation and lower interest rates next year.

By early evening in Europe, US light sweet crude was down more than $3 at $103.26, while Brent crude was $4.14 lower at $99.30. Prices had hit a record of $147 a barrel in July.

Several factors have contributed to the decline – most recently a pledge from Chakib Khelli, president of the Organisation of Petroleum Exporting Countries (Opec), that the cartel would not cut production. Mr Khelli, the Algerian Oil Minister, told an Opec conference in Vienna: "We are going to stay with the level of production where we are now."

Comments by Saudi Arabia, Opec's chief producer, that the market was "fairly well-balanced" also suggested that output would be unchanged. This led the financial markets to conclude that, for now at least, oil will stabilise at about $90 to $100.

That is still 50 per cent higher than last year and about 10 times what it was a decade ago, but the possibility that inflation may soon abate will be widely welcomed.

Oil prices are falling partly because o f the strength of the US dollar, but the fundamental reason is the slowdown in the global economy and fears of recession in America and Europe. Economic growth in China, India and other emerging markets is also stalling, which has depressed demand for oil and other raw materials.

As governments turn to alternative energy sources and motorists switch from gas-guzzling 4x4s to smaller cars and public transport, demand for oil has visibly reduced.

The effect of lower fuel costs will soon feed through to a slower rate of price rises in shops. This week's figures for "factory gate" inflation indicated that manufacturers in Britain are already feeling the benefit of lower commodity prices.

Although inflation is expected to peak at about 5 per cent this autumn, evidence is mounting that, to quote the Bank of England policy-maker David Blanchflower, it will "plummet like a stone" soon afterwards.

Mr Blanchflower has consistently warned colleagues about the danger of leaving interest rates too high and has argued passionately for an early reduction. His pleas have so far gone unheeded, but economists expect an aggressive programme of rate cuts from the Bank to begin later this year.

David Shaw, an economist at Investec, said yesterday: "This easing in oil prices should help reverse a spike in UK inflation. We forecast it falling back from an expected peak of 5.1 per cent to below 2 per cent in the second half of next year."

Oil Drops Below $100 A Barrel

Oil prices have fallen below $100 a barrel for the first time in nearly six months after Opec said it would not cut production.

Oil prices have come down a lot since earlier this year

In London, Brent North Sea crude for October delivery plunged $4.14 to $99.30.

In the US, light, sweet crude fell $3.08 to settle at $103.26 on the New York Mercantile Exchange.

Opec president Chakib Khelil said the cartel would keep production unchanged, despite sinking prices and slowing economic growth.

He told reporters at Opec's six-montly meeting in Vienna that prices would stay in the $90-$100 range long term.

Oil prices peaked at a record high of $147 in July - causing inflationary pressure and economic woes across the world.

There's a feeling that the level of global demand for energy really doesn't match oil's ridiculously high price and that realisation has only come through lately

Read oil price blog by Sky's business presenter Emma Crosby.

Petrol prices on UK forecourts have not fallen as quickly as the oil price, with average unleaded petrol down from July's peak of 119.7p to 112.7p at the weekend - a drop of nearly 6%.

Average diesel prices have fallen from 133.3p to 124.1p, just under 7%.

The AA said it takes around four to six weeks for oil price changes to filter through to forecourt pumps.

Last month, the International Energy Agency forecast that oil demand would contract to 48.6 million barrels per day this year and then fall to 48 million in 2009.

Opec nations have around two-thirds of the world's known oil reserves.