OPEC Plans Another Cutback in Oil Productionadmin
OPEC, whose member nations produce 40 percent of the world’s oil, said yesterday it would cut output by 1.9 percent in February. OPEC also accepted Angola as a member to gain greater control over global crude supplies.
Production will be pared by 500,000 barrels a day as of Feb. 1, OPEC President Edmund Daukoru told journalists in Abuja, the Nigerian capital. The cut is in addition to the 1.2 million barrel-a-day reduction agreed upon by the OPEC at its previous meeting on Oct. 20 in Doha, Qatar.
The 11-member group, known formally as the Organization of the Petroleum Exporting Countries, is attempting to revive prices that have slid about 21 percent from a July record of $78.40 a barrel in New York. The cuts take effect about seven weeks before the end of the Northern Hemisphere winter, when demand for heating fuels typically starts to decline.
“OPEC is sending a message that it is trying to control supply and keep a floor under the price,” said Mike Wittner, the London-based head of energy market research at Calyon, a unit of Credit Agricole SA. “It’s a compromise between the countries that wanted a cut and those that wanted a rollover.”
Oil rose yesterday on speculation that OPEC’s meeting would result in lower supplies, jumping $1.14, or 1.9 percent, to $62.51 a barrel on the New York Mercantile Exchange.
“The decision is short-term bullish but it won’t push prices up by several dollars,” Wittner said.
Angola’s membership will be effective Jan. 1, said Daukoru, who is also Nigeria’s oil minister. Angola won’t be bound by the new agreement until March 1, he said.
Angola will be the first country to join OPEC since Gabon, which became a member in 1975 only to exit in 1994. Nigeria, the group’s fifth-largest producer and a member since 1971, was the last existing member to join, according to the group’s Web site.