Business | Oil & Gas
Oil rises above $45 ahead of expected Opec cut
Oil rose above $45 on Tuesday, bolstered by expectations Opec will agree on its largest ever supply cut this week to try to halt a fall in prices due to shrinking global demand.
- Agencies
- Published: 18:48 December 16, 2008
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London: Oil rose above $45 on Tuesday, bolstered by expectations Opec will agree on its largest ever supply cut this week to try to halt a fall in prices due to shrinking global demand.
Oil ministers from the Organisation of the Petroleum Exporting Countries meet in Algeria on Wednesday, with many members calling for output cuts of up to 2 million barrels per day (bpd).
US light crude for January delivery rose $1.05 to $45.56 a barrel at 1405 GMT.
London Brent crude was up 88 cents at $45.48.
Oil fell to a four-year low of $40.50 on December 5, down more than $100 from its July record above $147 a barrel.
The producer group expects global demand for its crude oil to fall by an average of 1.4 million bpd next year due to the downturn in the world economy.
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The drop in demand will be even more dramatic in the first quarter.
"In the first quater of 2009, the demand for Opec crude is expected to see a sharp drop of 2.3 million bpd from the same quarter in the previous year," it said in its latest monthly report on the oil market.
Opec has already agreed to cut output by 2 million barrels a day at two previous meetings.
But demand has fallen faster than Opec has cut and as a result, stocks of oil are building up.
Opec said 45 million barrels of crude oil are currently being stored at sea on oil tankers.
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