Oil production cuts expected after Opec meeting

28 November 2008

Analysts have predicted that Opec will announce further production cuts after its meeting in Cairo tomorrow to combat the flagging price of crude oil.

Despite original claims that reductions would not be announced until the December meeting, Opec is expected to spring into to action since figures released yesterday showed the value of oil dropped by 63 per cent from record summer highs.

But Stephen Schork, president of Schork Group in Pennsylvania, is not convinced this will help the markets, telling Bloomberg: "They might say that they will cut one million barrels but in reality the market knows maybe they'll cut 500,000 to 600,000."

This, he claimed, "is simply not enough to exercise the surplus out of the market".

He added that Opec can only control the supply side of the equation - it has no control over demand.

If demand is weak now it is only likely to get weaker, he said.

Meanwhile, the value of oil has remained steady on the markets today - which home heating oil customers may be glad to hear.

A barrel of Brent crude is currently valued at $52.74 (£34.15) and US crude at $53.90.

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