OPEC will announce a cut in its oil production target of about two million barrels a day, Saudi Oil Minister Ali Al-Naimi said here Tuesday. “There will be a cut of about two million barrels,” he said on arriving here for an OPEC ministerial meeting on Wednesday. OPEC headed on Tuesday for an expected sharp cut in oil output in a bold bid to prop up prices at a time of crumbling demand and rising crude stocks in a recession-strapped global economy. Libyan OPEC representative Shukri Ghanem, arriving here for a much-awaited OPEC ministerial meeting on Wednesday, said the group should decide on a “substantial cut.” Ministers from the 13-member organization are widely predicted to approve a reduction in their output quota, with estimates ranging from one to two million barrels a day, from the current level of 27.3 million. OPEC said world oil demand will fall in 2009, dragged down by the global economic meltdown that has pummeled developed countries' economies. In its December Monthly Oil Report released Tuesday, the 13-member Organization of Petroleum Exporting Countries said world oil demand was forecast to average 85.7 million barrels per day in 2009. That is down 150,000 barrels per day from 2008 levels. Last month, it predicted 2009 demand would be 86.68 million barrels per day, or 1 million barrels per day higher. OPEC would like to see non-members slash their oil production by between 500,000 and 600,000 barrels a day, OPEC Secretary General Abdalla Salem El-Badri said here Tuesday. “I would like not less than 500,00-600,000 barrels a day” from non-members, Badri told reporters ahead of a meeting Wednesday of OPEC ministers, where a reduction in crude oil output of two million barrels a day is expected. “I think two million is the most likely cut,” Badri said. OPEC has appealed to non-members, notably Russia, to help it to reduce output and prop up oil prices. It was not clear whether Badri wanted the 500,000-600,000 barrels cut to be part of the two million announced earlier Saudi Arabia. Russian officials said the top non-OPEC producer could reduce 320,000 bpd to give greater punch to OPEC's efforts. US crude traded down $1.46 to $43.05 a barrel at 2:39 P.M. EST (1939 GMT). London Brent crude fell 10 cents to $44.50. In other Nymex trading, gasoline futures rose less than a penny to $1.046 a gallon. Heating oil gained less than a penny to $1.4682 a gallon while natural gas for January delivery gained 12 cents to $5.766 per 1,000 cubic feet. OPEC hawk Venezuela said on Tuesday it would support cutting the cartel's daily oil output by at least one million barrels in a bid to halt a plunge in crude prices. Venezuela's Oil Minister Rafael Ramirez told reporters on arrival in Oran that the group had to try and support prices. “In order to do that we should be ready for an important cut,” Ramirez said. Asked by how much OPEC should reduce its daily output, he added: “A minimum of one million” barrels. OPEC is also looking for a reduction by non-OPEC powerhouses such as Russia, which is sending a delegation here and has said it might consider joining the organization. OPEC officials acknowledge that they are in a tight spot as crude prices dwindle in the face of a global economic downturn that has sapped demand for energy in the industrialized world. Several OPEC members heavily dependent on oil exports, notably Nigeria, Ecuador and Venezuela, are being squeezed financially as oil prices have plummeted 70 percent from highs of $147 a barrel just five months ago. The problem facing OPEC is that whatever steps it takes to reduce supply to shore up prices risks dampening demand further as many of its biggest customers are grappling with recession and need less oil. “The decision in Algeria will not be whether to cut quotas further, but how large a reduction to make,” analysts at the Centre for Global Energy Studies (CGES) said in its latest monthly report. But it warned: “If OPEC cuts too far it risks undermining demand even further at a time when the global economy needs moderate oil prices.” The CGES forecast that global oil demand would fall by half a million barrels per day next year. “The weakening economic outlook means that global oil demand will contract for the second year in succession in 2009,” the influential research group said.
