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Oil falls despite Opec's threats | |
(about 4 hours later) | |
Oil prices briefly topped $50 a barrel on Monday before dropping almost $5 a barrel, despite threats of production cuts from oil producers' cartel Opec. | |
Opec is meeting in Oran in Algeria, having delayed a production decision at an informal meeting earlier this month. | |
Some members are keen to cut production by two million barrels per day to boost prices, which have slumped from a peak of $147 a barrel in July. | Some members are keen to cut production by two million barrels per day to boost prices, which have slumped from a peak of $147 a barrel in July. |
US light, sweet crude for January delivery fell $1.18 to trade at $45.10. | |
The price had earlier peaked at $50.05 a barrel. | The price had earlier peaked at $50.05 a barrel. |
In London, Brent crude for January fell 60 cents to $45.81. | |
Opec's biggest previous cut in production was in April 1999 when it cut production by 1,716,000 barrels per day (bpd). | Opec's biggest previous cut in production was in April 1999 when it cut production by 1,716,000 barrels per day (bpd). |
'Sizeable reduction' | 'Sizeable reduction' |
Prices are being depressed by falling demand for oil as the world's major economies slow and some of them go into recession. | Prices are being depressed by falling demand for oil as the world's major economies slow and some of them go into recession. |
There were further signs of economic weakness on Monday, with the news that Toyota would indefinitely delay a new assembly plant in Mississippi as a result of the US car industry downturn. | |
Opec cut 1.5 million bpd at its last formal meeting in Vienna, Austria, in October, but prices continued falling regardless, and hit a four-year low of $40.50 a barrel on 5 December. | |
"We have to act - we see a very sizeable reduction," Opec secretary-general Abdullah al-Badri told reporters. | "We have to act - we see a very sizeable reduction," Opec secretary-general Abdullah al-Badri told reporters. |
Two million barrels represents about 5% of Opec production. | Two million barrels represents about 5% of Opec production. |
"Everybody is supporting a cut - I don't have any doubt about it," said Opec president Chakib Khelil. | "Everybody is supporting a cut - I don't have any doubt about it," said Opec president Chakib Khelil. |
Mr Khelil also confirmed that Opec's biggest exporter, Saudi Arabia, had already cut its own production by 8% in anticipation of the cartel's decision. | Mr Khelil also confirmed that Opec's biggest exporter, Saudi Arabia, had already cut its own production by 8% in anticipation of the cartel's decision. |
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