OPEC production cuts send a message to the oil market

With all the talk and rumors over the last month, we expected to see OPEC cut oil production by 1 million barrels per day. However, according to Reuters, Friday's announcement of the deeper than expected cut of 1.2 million barrels seemed to send an intended message to buyers on the oil market: if the price of oil does not stabilize, OPEC would be open to even deeper cuts.
Unofficial talk of further production cuts seems to be lurking from many different sources and those cuts may come as soon as December. Qatar energy minister Abdullah bin Hamid Al-Attiyah said that the cartel's members are not excluding further cuts while the Dow Jones Newswire reported that OPEC president Edmund Daukoru said that the possible need of a further half million barrel cut was "in line with my own thinking."

By the end of the day, the price of light sweet crude oil rose 47 cents to 58.97.

[Source: Reuters via MSNBC]

Share This Photo X