Business | Oil & Gas
Oil rises above $46 ahead of expected cut by producer group
Oil rose above $46 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.
- Reuters
- Published: 23:30 December 16, 2008
London: Oil rose above $46 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 today, with many members calling for output cuts of up to 2 million barrels per day (bpd).
US light crude for January delivery rose $1.60 to $46.11 a barrel at 1453 GMT.
London Brent crude was up $1.73 at $46.33.
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.
"Opec won't face a bigger decision than this for some time to come," Bank of Ireland analyst Paul Harris said. "If they don't put a floor under prices with a cut of some significance then it could have huge ramifications for the future of the oil market."
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.
The drop in demand will be even more dramatic in the first quarter. Opec has already agreed to cut output by 2 million barrels a day at two previous meetings.
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