OPEC confirms cut, oil futures up

OPEC confirms cut, oil futures up

Reuters, London

Oil prices pushed closer towards US$21 a barrel on Friday
after OPEC announced it would cut supply by 1.5 million barrels
per day (bpd) from Jan. 1.

February Brent crude oil futures stood 42 cents up at $20.76 a
barrel after OPEC producers on Friday tightened the screw on oil
supplies in a pact with independent exporters that cuts world
production by nearly two million barrels daily.

The cartel agreed to cut output by 6.5 percent after winning
pledges from five non-OPEC nations to shave 462,500 bpd.

The curbs were imposed for six months although ministers are
set to meet again in mid-March to review policy.

OPEC is aiming to lift prices back towards the bottom end of
its preferred $22-$28 target range, equivalent to about $24-$30
for Brent.

It successfully defended that high price band for 18 months
until the Sept. 11 attacks in the United States signalled a
further deterioration in the ailing world economy.

Analysts said the cartel's alliance with non-OPEC could spell
bad news for industrialised petroleum importing nations
struggling to combat recession and which had found some help in
recent months from lower energy costs.

But they said compliance and implementation of the new
production quotas remained the key watch words.

Saudi Arabian Oil MInister Ali al-Naimi said Riyadh would set
an example by immediately lowering crude sales in line with its
new OPEC quota.

Other big suppliers, the United Arab Emirates and Iran said
they would do their best to immediately comply.

Saudi Arabia has already trimmed its January crude allocations
to most international majors, market sources said early this
month.