OPEC May Decide on Further Cut in Cairo, Libya Says

By Ayesha Daya and Alexander Kwiatkowski

Nov. 24 (Bloomberg) -- The Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s oil, may decide to cut output when it meets in Cairo later this week, Libya’s top oil official Shokri Ghanem said.

“It is too early to say how much needs to be cut,” Ghanem said in an interview from Tripoli today. “I don’t want to start throwing numbers out without consulting my colleagues. We want a consensus.”

OPEC’s decision to trim output by 1.5 million barrels a day at a meeting in Vienna last month failed to stem the decline in crude prices as the global economic slump crimps fuel demand. Prices have since tumbled more than 22 percent to a three-year low, raising speculation the group will reduce production again.

Shipping data released last week indicate the group will cut oil supplies by 3.8 percent this month as it implements its Oct. 24 resolution. The group’s 13 members supplied 30.98 million barrels a day this month, compared with 32.2 million a day in October, according to Geneva-based consultant PetroLogistics Ltd.

The reduction failed to stop the rout in oil markets. Crude futures fell to the lowest since May 2005 on Nov. 21 on signs of lower oil consumption in Europe, Asia and the U.S. The International Energy Agency, the Energy Department and OPEC have slashed demand projections this month because of the deteriorating economic outlook.

Estimated Oversupply

Slowing global demand has left a 1 million barrel-a-day oversupply that needs to be removed by year-end, Venezuela’s Oil Minister Rafael Ramirez said yesterday. Crude prices are down 66 percent from a record $147.27 a barrel on July 11.

OPEC, which supplies of more than 40 percent of the world’s oil, will discuss compliance with a previous cut at the Nov. 29 meeting in Cairo, according to Ghanem.

“We won’t have production data yet, but at least we can consult with each other. It does not mean we can’t take a decision,” he said.

OPEC’s main goal is to stabilize the market, Ghanem said.

“We are worried about the direction of prices -- we need to see if the oil price is falling because liquidity is leaving the market or if there is too much oil in the market,” he said in the interview.

As well as this week’s meeting in Cairo, OPEC is due to hold another summit in Algeria on Dec. 17 after its decision last month to slash production by 1.5 million barrels a day failed to stop oil prices crashing to below $50 a barrel.

Crude oil for January delivery traded for $49.85 a barrel on the New York Mercantile Exchange at 10:44 a.m. London time.

To contact the reporter on this story: Ayesha Daya in Dubai adaya1@bloomberg.netAlexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net