An OPEC output cut of at least a million barrels per day (bpd) is needed to take away oversupply in the oil market, two OPEC sources said on Wednesday.
“A cut of at least a million barrels per day is needed in my view,” an OPEC delegate told Reuters. “Anything less would still mean more supply than demand.” A second source said a cut could be of up to 1.5 million bpd. “At the moment, the upper limit of a cut would be 1.5 million barrels per day,” the source said. Neither source specified when the reduction would need to be implemented. OPEC meets on Friday.
Oil dropped nearly 7% to a new 16-month low on Wednesday, as rising US fuel inventories added to signs an economic slowdown has dragged down demand in the world’s biggest energy consumer. Gloom about the global economic outlook could limit the impact of any oil supply cuts OPEC might agree at a meeting on Friday.
US crude for December delivery fell $5 to $67.18 by 12:47 EST (1637 GMT), touching its lowest since June 2007. London Brent crude traded down $4.52 at $65.20. US crude oil inventories rose 3.2 million barrels in the week to Oct. 17, according to US government data, against analyst expectations for a 2.6 million build.
Distillate inventories leaped by 2.2 million barrels against predictions for a 100,000 barrel gain. [EIA/S] The Energy Information Administration also reported a rise of 2.7 million barrels in gasoline stocks versus forecasts for a 2.8 million increase. “The numbers look bearish on virtually all fronts,” said Jim Ritterbusch of Ritterbusch & Associates. „The data reinforces our bearish view and ups the probability of $62 crude,” he said. (Reuters)