Oil down in Asia as OPEC maintains output quota
Tuesday, 2 December 2008
SINGAPORE, Dec 1 (AFP): World crude prices weakened in Asia today after the OPEC oil cartel maintained existing production quotas at a weekend meeting amid a global downturn, dealers said.
OPEC's decision underlined the severity of the world economic slump which has already sapped energy demand in the United States, the world's biggest oil user, they said.
New York's main contract, light sweet crude for January delivery, sank 88 cents to 53.55 dollars.
Brent North Sea crude for January delivery eased 1.27 dollars to 52.22 dollars.
The Organisation of the Petroleum Exporting Countries (OPEC), suffering from declining oil prices, decided at a meeting Saturday in Cairo to freeze its output quota.
"That is quite bearish for the market itself," David Ernsberger, Asia editorial director with Platts, an energy information provider, said.
"Ever since July, the market has been struggling to cope with the fact that US demand is down... So the underlying sentiment is still weak," he said.
OPEC, which pumps 40 per cent of the world's crude, said any further decision regarding the production quota would be decided at a December meeting in Oran, Algeria.
"Ministers agreed to take any additional action on December 17th to balance oil supply and demand and achieve market stability," OPEC President Chakib Khelil, who is also Algeria's energy minister, said in Cairo after the meeting.
Khelil, addressing a news conference, also acknowledged that the global financial crisis and looming worldwide recession would dampen demand significantly for the first six months of 2009.
"We realise that in the first quarter of next year we are probably going to have a decline in demand, and in the second quarter we are going to have a big decline," he said.
OPEC has already slashed output twice this year by a total of two million barrels per day in response to falling prices but fears of a global downturn continued to push prices lower.
Crude prices are down by more than 60 per cent from record peaks of above 147 dollars seen in July.
Analysts said OPEC's hands were tied because cutting output could damage the world economy even more.
OPEC's decision underlined the severity of the world economic slump which has already sapped energy demand in the United States, the world's biggest oil user, they said.
New York's main contract, light sweet crude for January delivery, sank 88 cents to 53.55 dollars.
Brent North Sea crude for January delivery eased 1.27 dollars to 52.22 dollars.
The Organisation of the Petroleum Exporting Countries (OPEC), suffering from declining oil prices, decided at a meeting Saturday in Cairo to freeze its output quota.
"That is quite bearish for the market itself," David Ernsberger, Asia editorial director with Platts, an energy information provider, said.
"Ever since July, the market has been struggling to cope with the fact that US demand is down... So the underlying sentiment is still weak," he said.
OPEC, which pumps 40 per cent of the world's crude, said any further decision regarding the production quota would be decided at a December meeting in Oran, Algeria.
"Ministers agreed to take any additional action on December 17th to balance oil supply and demand and achieve market stability," OPEC President Chakib Khelil, who is also Algeria's energy minister, said in Cairo after the meeting.
Khelil, addressing a news conference, also acknowledged that the global financial crisis and looming worldwide recession would dampen demand significantly for the first six months of 2009.
"We realise that in the first quarter of next year we are probably going to have a decline in demand, and in the second quarter we are going to have a big decline," he said.
OPEC has already slashed output twice this year by a total of two million barrels per day in response to falling prices but fears of a global downturn continued to push prices lower.
Crude prices are down by more than 60 per cent from record peaks of above 147 dollars seen in July.
Analysts said OPEC's hands were tied because cutting output could damage the world economy even more.