LONDON, Oct 11: World crude prices were mixed in cautious trade on Wednesday after Opec said that its members would cut their combined output by one million barrels per day in November.
Prices had shown heavier losses earlier in the day, and the subsequent firming in New York crude indicated that the Opec announcement was lending some support, dealers said.
New York's main contract, light sweet crude for delivery in November, added eight cents to $58.60 per barrel in pit trading. It had earlier dropped below $58 to $57.87.
In London, Brent North Sea crude for November delivery slid 28 cents to $59.06 per barrel in electronic deals.The 11 members of the Opec oil cartel have agreed to slash output by a million barrels a day, the Opec president said Wednesday, in a move aimed at shoring up sliding world crude prices.
“Our position to cut one million bpd (barrels per day) has received consensus. All members have agreed” on the figure, Nigerian Oil Minister Edmund Daukoru told AFP, adding that the cut would go into effect next month.
However, the OPEC secretariat in Vienna, questioned by AFP, could not immediately confirm that an accord had been struck.
Barclays Capital analyst Kevin Norrish said that Opec's latest output move appeared to lack clarity.
“There is no clarity as yet over the amount of oil to be cut, by whom and from what levels,” Norrish said.
“The market appears to be interpreting this as a lack of determination to actually cut production, resulting in further price weakness.”
Crude futures had slumped by more than a dollar on Tuesday as traders cast doubt on the chances of the OPEC cartel cutting its production.
Sucden analyst Michael Davies said the market was not “very impressed” by Opec members’ move to cut output, however, since many “were already producing less than their quotas”.
Members have acted in a bid to support prices, which have tumbled from record highs above $78 per barrel reached in July and August.
Elsewhere, the IEA shaved on Wednesday its forecast for growth of global oil demand this year and next.
The International Energy Agency said in its monthly report that a possible Opec output cut, global instability and growth in China were likely to keep the market under tension, even though prices had fallen because of stock building and slowing demand.
The agency forecast an increase of 1.2 per cent in global oil demand this year to 84.6 million barrels per day and a 1.7 per cent rise in 2007 to 86.0 million barrels per day.—AFP