Oil prices fell to an 11-month low below US$57 a barrel on Friday in a sign of the market's doubts about OPEC's willingness to carry out a 4 percent production cut.
The pledge to curb output by 1.2 million barrels a day, announced after an emergency meeting in Doha, Qatar, came after oil prices had fallen by roughly US$20 since a mid-July peak above US$78 a barrel. Some oil-cartel members warned output could be trimmed further when the group meets in December.
But many analysts believe OPEC will have difficulty enforcing the production cut in its entirety because oil prices are still twice as high as they were just three years ago.
"It's clear there will be some production cutbacks. But is it going to be 1.2 million barrels? That's probably unlikely," said Andrew Lebow, a broker at Man Financial.
OPEC has a history of "cheating," or producing above its official quota, when prices are high and analysts are therefore reluctant to accept the cartel's intentions at face value.
Moreover, many analysts see OPEC's action as proof that the group responsible for supplying more than a third of the world's oil is increasingly worried about slowing demand growth and burgeoning supplies from non-OPEC sources.
"What brought us to this point -- where OPEC needs to reduce production by 1 million barrels a day -- is bearish for prices," said James Cordier, president of Liberty Trading in Tampa, Florida.
"The fact is, demand has fallen or is about to fall more and OPEC is trying to catch this by producing less," he said.
Light sweet crude for November delivery on the New York Mercantile Exchange fell US$1.68 to settle at US$56.82 a barrel. The last time front-month futures settled below US$57 was Nov. 29 last year.
In London, Brent crude for December delivery on the ICE Futures exchange settled at US$59.68 a barrel, a decline of US$1.19.
Oil prices have tumbled since summer due to rising global supplies, a weaker than anticipated hurricane season and expectations for slower economic growth. The OPEC production cut is intended to halt the decline.
"The question now is whether OPEC members will comply with the new quotas or whether history will repeat itself and OPEC members over-produce," Global Insight analyst Simon Wardell said in a research note. "The markets appear to be betting on the latter."
United Arab Emirates Oil Minister Mohammed bin Dhaen al-Hamili said the reductions will come from actual production levels, which are believed to be about 29.5 million barrels of oil per day.
The official OPEC quota, which does not include Iraq's estimated output of 2 million barrels a day, is 28 million barrels a day.
OPEC's announced cut was the first since December 2004, when oil traded slightly above US$40 a barrel. It will take effect Nov. 1, just as global oil demand should begin to rise as winter approaches in the Northern Hemisphere.
The move comes at the "worst time," said Claude Mandil, head of the International Energy Agency.
Saudi Arabia, the world's largest producer, is set to cut output by 380,000 barrels a day, while Iran will cut by 176,000 barrels a day and Venezuela will trim 138,000 barrels a day, analysts said.
The Eurovision Song Contest has seen a surge in punter interest at the bookmakers, becoming a major betting event, experts said ahead of last night’s giant glamfest in Basel. “Eurovision has quietly become one of the biggest betting events of the year,” said Tomi Huttunen, senior manager of the Online Computer Finland (OCS) betting and casino platform. Betting sites have long been used to gauge which way voters might be leaning ahead of the world’s biggest televised live music event. However, bookmakers highlight a huge increase in engagement in recent years — and this year in particular. “We’ve already passed 2023’s total activity and
Nvidia Corp CEO Jensen Huang (黃仁勳) today announced that his company has selected "Beitou Shilin" in Taipei for its new Taiwan office, called Nvidia Constellation, putting an end to months of speculation. Industry sources have said that the tech giant has been eyeing the Beitou Shilin Science Park as the site of its new overseas headquarters, and speculated that the new headquarters would be built on two plots of land designated as "T17" and "T18," which span 3.89 hectares in the park. "I think it's time for us to reveal one of the largest products we've ever built," Huang said near the
China yesterday announced anti-dumping duties as high as 74.9 percent on imports of polyoxymethylene (POM) copolymers, a type of engineering plastic, from Taiwan, the US, the EU and Japan. The Chinese Ministry of Commerce’s findings conclude a probe launched in May last year, shortly after the US sharply increased tariffs on Chinese electric vehicles, computer chips and other imports. POM copolymers can partially replace metals such as copper and zinc, and have various applications, including in auto parts, electronics and medical equipment, the Chinese ministry has said. In January, it said initial investigations had determined that dumping was taking place, and implemented preliminary
Intel Corp yesterday reinforced its determination to strengthen its partnerships with Taiwan’s ecosystem partners including original-electronic-manufacturing (OEM) companies such as Hon Hai Precision Industry Co (鴻海精密) and chipmaker United Microelectronics Corp (UMC, 聯電). “Tonight marks a new beginning. We renew our new partnership with Taiwan ecosystem,” Intel new chief executive officer Tan Lip-bu (陳立武) said at a dinner with representatives from the company’s local partners, celebrating the 40th anniversary of the US chip giant’s presence in Taiwan. Tan took the reins at Intel six weeks ago aiming to reform the chipmaker and revive its past glory. This is the first time Tan
RSS