OPEC to annnounce 1.5 mln bpd output cut next week

OPEC will announce another cut of around 1.5 million barrels per day (bpd) in oil production next week in an attempt to halt a collapse in prices of more than two thirds since July, a Reuters poll showed.

Eleven banks, companies and research groups surveyed Dec. 9-10 were unanimous in their view that the Organization of the Petroleum Exporting Countries would cut at least 1 million bpd at its meeting in Oran, Algeria on Dec. 17.

Some analysts think a cut of 2 million bpd is on the cards.

"It is clear that OPEC has to act to stabilise oil prices," said Sintje Diek, oil analyst at HSH Nordbank in Hamburg.

"It must cut production decisively and quickly."

Oil prices hit an all-time high above $147 a barrel in July but the market has tumbled since then as a worldwide economic slump has deepened. U.S. crude was trading just below $45 a barrel on Thursday.

As recession has swept the globe, consumers and companies have started to use less oil, leading to the first decline in world oil demand for decades.

The U.S. Energy Information Administration forecast this week that world oil demand would shrink 50,000 bpd this year and by 450,000 bpd in 2009. Oil demand in the United States alone would fall by 1.2 million bpd this year, it said.

OPEC has sought to trim oil production to keep it in step with falling demand. At a meeting on Oct. 24, with oil prices not far off $65 a barrel, OPEC agreed to cut its production by 1.5 million bpd.

How big a production cut will OPEC announce on Dec. 17?

barrels per day

(millions) BNP Paribas 1.0-1.5 Centre for Global Energy Studies 1.0 Global Insight 1.5-2.0 HSH – Nordbank 2.0 J.P.Morgan 2.0 Landesbank 1.5 MF Global 1.0-1.5 Petromatrix 1.5 PVM 2.0 Societe Generale 1.5 Sucden 1.5 AVERAGE FORECAST 1.57