OPEC Confirms Oil Production Cuts
October 11th, 2006 | by Brian Carr |Organization of Petroleum Exporting Country’s (OPEC) President Edmund Daukoru announced that the oil cartel has agreed to cut crude oil production by 1,000,000 barrels per day in an effort to stabilize global oil prices.
According to Daukoru, the only thing left to be determined is how the million barrels will be split up among the 11 members of OPEC.
Based on this confirmation of crude oil production cuts, the price of oil up slightly (18 cents) mostly because this news has been priced into the market for the better part of two weeks.
Since hitting its all-time high of $78.40 per barrel on July 14, the price of crude oil has been in a free fall, losing well over 25% of its value, thanks to continued increases in world wide oil and gasoline inventories. OPEC believes these production cuts will help stabilize the price of oil and keep it right around $60 per barrel.
However, oil prices may ultimately continue to fall (or more OPEC production cuts may be coming) if the Northern Hemisphere - the United States in particular - has a warmer than usual winter, which would obviously cause a significant drop in oil consumption.
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