VIENNA: The Organization of Petroleum Exporting Countries said yesterday it was ready to intervene to help prop up prices as a looming global recession undermines worldwide demand for oil.
“In the current extremely volatile situation, closer monitoring and more frequent intervention are required,” OPEC said in its November monthly report published yesterday. “OPEC will continue to carefully follow oil market developments ahead of the OPEC ministerial meeting in Oran, Algeria, and stands ready to take the necessary decisions to support oil market stability.”
The oil organization is scheduled to hold an extraordinary meeting on Nov. 29 in Egypt amid speculation that member nations will agree to cut output in a bid to boost plunging oil prices.
OPEC agreed on Oct. 24 to reduce production by 1.5 million barrels per day from Nov. 1, but prices have continued to slide since then.
Yesterday, Brent North Sea crude for January delivery fell $1.13 to $53.11 per barrel on London’s InterContinental Exchange (ICE).
On the New York Mercantile Exchange (NYMEX), light sweet crude for December sank $1.34 to $55.70 a barrel.
Last week, prices slumped to three-and-a-half-year lows close to $50, prompting the OPEC exporters’ organization to call an emergency meeting to discuss a mooted output reduction.
Brent oil tumbled to $50.60 last Thursday, hitting the lowest level since May 2005, while New York crude struck a January 2007 low point at $54.67 a barrel.
Iran, OPEC’s second largest producer, said it will propose slashing output by between 1.0 million and 1.5 million barrels per day (bpd).
Prices of crude have collapsed by about two-thirds since striking record peaks above $147 in July on concern that a prolonged global recession could slam the brakes on energy demand.
In its report, OPEC slashed its forecast for growth in world oil demand for both this year and next.
Even continued robust demand in developing and emerging economies would not be sufficient to offset slumping demand in highly developed countries, the organization said.
This year, economic turmoil “continues to undermine oil demand growth, especially in the OECD (Organization for Economic Cooperation and Development) countries,” the report said.
“Led by losses in the US, OECD oil demand showed a major drop of 1.7 million barrels per day (bpd) year-on-year in October.
“Non-OECD oil demand growth stood at 1.2 million bpd, resulting in a decline of total world oil demand of around 0.5 million bpd.”
“Due to the declining oil demand in OECD, world oil demand in 2008 was revised down by 260,000 bpd and is now expected to grow by 290,000 bpd to average 86.2 million bpd,” the report said.
“Should the weather become warmer, then further downward revisions might be possible.”
Looking ahead to next year, oil demand growth in 2009 “will be boosted mainly by non-OECD countries, particularly the Middle East, Asia, and China,” OPEC said. “Deteriorating economies in OECD countries are estimated to yield in declining oil demand which is forecast to pull total world oil demand growth down to less than 600,000 barrels per day in 2009.”
Thus, world oil demand growth in 2009 was revised downward from 760,000 bpd to 490,000 bpd, with global oil demand next year set to average 86.68 million bpd, OPEC said.
