OPEC threat to cut production fails to bolster crude prices

Mumbai: A proposal by the Organisation of Petroleum Exporting Countries (OPEC) for an emergency one million tonne cutback in production seems to have only marginal impact on the oil market with crude prices edging up marginally to  $68.12 a barrel from a 16-month low of $66.75 a barrel on Wednesday.

OPEC members are meeting in Vienna tomorrow, ahead of the scheduled 15 November summit, amidst calls by energy hawks Iran and Venezuela to cut production further.

Iran's oil minister Gholam Hossein Nozari, who arrived in Vienna on Wednesday, called for a 2 million bpd cut to shore up crude prices shaken by the global financial market turmoil.

While Libya, Venezuela and Qatar have also called for production cuts, OPEC kingpins like Saudi Arabia are unlikely to endorse higher production cuts, given the fact that the market is already flooded with oil and oil demand has declined amidst a rise in inventories.

Crude oil for December delivery on the New York Mercantile Exchange, which closed at a 16-month low of $66.75 a barrel on Wednesday,  rose to $68.12 a barrel on Thursday.

North Sea Brent crude for December delivery gained $1.38 at $65.90 per barrel. Brent had hit a low of $63.96 the previous day – a level that was last witnessed in March 2007.