Oil Below $75: Increased Chance of OPEC Production Cuts

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Yesterday, in its monthly report, OPEC reduced its forecast for 2009 demand by 190,000 barrels a day as well. It was the cartel’s seventh consecutive forecast reduction. OPEC said that total oil consumption in developed countries fell by more than 1 million bpd in the year through September.

Oil prices slid below $75 a barrel yesterday (Wednesday) skidding to a new 12-month low and increasing the chances that the Organization of Petroleum Exporting Countries (OPEC) will cut production at its next meeting on Nov. 18...

The credit crisis has emaciated countries around the world, sparking fears that a severe global recession is just beginning to set in. The outlook for energy has darkened substantially as a result.

The International Energy Agency (IEA) lowered its forecast for 2008 global demand growth by 250,000 barrels per day (bpd) to 440,000 on Oct. 10. The agency cut its 2009 growth forecast by 190,000 bpd to 690,000.

Yesterday, in its monthly report, OPEC reduced its forecast for 2009 demand by 190,000 barrels a day as well. It was the cartel’s seventh consecutive forecast reduction. OPEC said that total oil consumption in developed countries fell by more than 1 million bpd in the year through September...

Last week OPEC President Chakib Khelil said it was “very likely” that the group would cut production at its Nov. 18 meeting. “The Organization is concerned about the deteriorating economic conditions with contagion risks,” Khelil said.

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