Oil prices have continued to fall on Monday, despite last week’s 1.5 million-barrel-a-day cut in production from oil producers’ cartel Opec.

US light sweet crude for delivery in December dropped to a 17-month low of $61.30 a barrel before recovering somewhat to trade at $62.42.

London Brent crude fell below $60 a barrel before recovering to $61.32.

The falls have been blamed on worries about how much a global economic slowdown will hit demand for oil.

“The mood is fairly negative reflecting worry about the international economic outlook,” said David Moore at Commonwealth Bank of Australia.

“If there is further weak economic data in the US or Europe, prices could come under more downward pressure.”

News reported by The BBC

World oil prices have continued to fall, undermining oil cartel Opec’s efforts to steady prices by cutting output by 1.5 million barrels a day.

The decision to cut about 5% of the cartel’s total daily output came after an emergency Opec meeting in Vienna.

The move did not halt the sliding oil price with US sweet, light crude down $3.69 at $64.15 after wild swings saw greater falls in earlier trade.

Recession fears have pulled oil down from a high of $147 a barrel in July.

The sell-off also hit London Brent, down $4.40 at $61.52.

Dramatic collapse

In a statement after the meeting, Opec said it had cut output because supply outpaced demand, and prices had collapsed dramatically in recent weeks.

“There’s not going to be any impact on inflation, there’s not going to be any impact on growth” OPEC President Chakib Khelil

UK supermarkets in petrol price war

The cut will take effect from 1 November.

The 13-nation producers group, responsible for producing about 40% of the world’s total supply, said it would continue to provide the market with the crude oil volumes required by consumers.

Analysts had expected Opec to cut output by at least one million barrels a day and some producers – such as Venezuela and Iran – wanted greater cuts.

More cuts?

OPEC President Chakib Khelil said because Opec members produce about 300,000 barrels a day more than the official quota of close to 29 million barrels, the total reduction by the end of the year would be about 1.8 million barrels a day.

Mr Khelil rejected the suggestion that the decision would hurt the global economy.

“There’s not going to be any impact on inflation, there’s not going to be any impact on growth.”

Opec oil ministers said that they would review their decision at their next meeting in December, leaving open the possibility of further cuts beforehand if necessary.

Revenue worries

Observers said that the failure of oil prices to climb suggested that Opec was losing its power.

“The power to influence oil prices is moving farther and farther away from Opec,” said oil analyst Stephen Schork.

“Everyone thought China and India would go on buying oil forever, but that’s not the case. The demand is no longer there. People fooled themselves when they said emerging markets could weather a US downturn.”

Ahead of the meeting, some of the cartel’s members called for a reduction in output to stop the fall in prices: Venezuela wanted production to be cut by a million barrels a day, while Iran had called for a cut twice that size.

The two countries are thought to be most in need of a relatively high oil price – around $100 a barrel – to finance government spending, says the BBC’s economics correspondent, Andrew Walker.

Iran relies almost entirely on its oil exports for government revenue: for every dollar off the price of a barrel of oil, the country loses roughly $1bn a year in revenue.

But British Prime Minister Gordon Brown warned that any reduction made in a bid to push up oil prices would be “scandalous” at a time when major economies were close to tipping into recession.

Motorists benefit

Oil prices hit an all-time high of $147 a barrel in July, but have since fallen back steadily.

Prices now stand at levels not seen since last spring, amid fears a global economic recession will cut demand.

The price that motorists have been paying for petrol at forecourts has been falling recently.

A price war has broken out among leading UK supermarkets with Asda, Sainsbury’s, Tesco and Morrisons all announcing cheaper petrol on Friday.

But some observers believe moves to reduce production could reverse that trend.

News reported by The BBC

The end of the week saw the price of oil at just $71.75 per barrel having dipped below $70 earlier in the week.

The price has risen towards the end of the week on the back of OPEC bringing forward its emergency meeting by three weeks to next week. Analysts are expecting the cartel to cut output at this meeting, which would boost prices.

It is dificult to say where the price will go after this – will the world slow down keep a downward pressure on the oil price depsite the reduced output or will the price stabalize now.

Good news on the oil reserves though from Cuba, where they are claiming to have 20 billion barrels in of-shore fields, which is twce their original estimates. If the estimates of these reserves is correct, Cuba’s oil reserves would be nearly as much as the reserves in the US, which is around 21 billion barrels.

You can see the worlds oil reserves here

It seems crazy that only in June of 2007 the Independent reported:

“In recent years the once-considerable gap between demand and supply has narrowed. Last year that gap all but disappeared. The consequences of a shortfall would be immense. If consumption begins to exceed production by even the smallest amount, the price of oil could soar above $100 a barrel. A global recession would follow.”

Oil prices hit six-month lows near $98 a barrel on Thursday as the dollar rallied and demand for fuel decreased.

Prices had risen earlier as Hurricane Ike headed towards oil installations on the Texas coast forcing nearly 7% of US fuel production to be shut down.

Opec had also reduced output to curb falling prices.

Brent North Sea crude for delivery in October settled at $97.29 a barrel after hitting its lowest level since March at $96.99.

And New York’s benchmark contract, light sweet crude for October, fell $1.71 cents to $100.87 a barrel after dipping as low as $100.10.

Demand focus

The dollar hit a one-year high against the euro and a number of other currencies on Thursday. The euro slid below $1.39 for the first time in a year on heightened concerns about a weak European economy.

The strong greenback makes goods such as oil – which are priced in dollars – more expensive for foreign buyers, dampening demand.

“Crude oil futures slipped further… as the market focused on demand concerns and the strengthening dollar,” said Sucden analyst Michael Davies.

Oil prices reached record levels of above $147 in July, hit by worries that a US-led economic slowdown would curb global demand for energy.

Producer cartel Opec announced a surprise cut in output levels in Vienna on Wednesday, causing prices to rise initially.

But oil fell below $100 a barrel on renewed fears that the deteriorating health of the global economy could dent demand.

The International Energy Agency (IEA) also cut its estimate for global oil demand this year and next.

The IEA said consumers in industrial nations were changing their lifestyles in response to high prices.

Unusual step

The Hurricane season has disrupted energy firms along the Gulf of Mexico – which accounts for a quarter of US oil production and 15% of natural gas production.

The sector is still reeling from the impact of Hurricane Gustav more than a week ago, which shut more than 95% of oil production and more than 73% of natural gas output.

In preparation for Ike, four Gulf coast refineries have shut down operations, accounting for 6.7 percent of the nation’s capacity.

Because of Hurricane Ike’s expected impact on oil and gas supply to the US, the Chicago Mercantile Exchange has announced it will have a special trading session this Sunday – a day it is usually closed.

News reported by The BBC

Opec has told its members to strictly limit their production to agreed quotas as Brent crude dipped below $100 a barrel for the first time since April.

After talks in Vienna, Opec president Chakib Khelil said the measures to curb over-production amounted to a cut of 520,000 barrels a day within 40 days.

North Sea Brent fell $4.54 to $99.04 on Tuesday before rising to $100.34, while US Brent fell $3.08 to end on $103.26.

Prices have sunk from a record of more than $147 a barrel seen in July.

The price has since fallen by nearly 30% as a global economic slowdown has reduced demand for oil.

Supply has also been increased in recent months by some Opec members – principally Saudi Arabia.

Meanwhile, Indonesia has said suspended its membership of Opec.

“The conference regretfully accepted the wish of Indonesia to suspend its full membership in the organisation and recorded its hope the country would be in a position to rejoin the organisation in the not too distant future,” Opec said in a statement.

Compromise

After the late-night talks in Vienna, the group announced it had decided to “strictly” comply to the production ceilings agreed in September last year, which amount to 28.8m barrels a day excluding Indonesia and Iraq.

It linked the falling price of oil to falling economic growth, a stronger US dollar, easing geo-political tensions and greater supply.

Supply has also been increased in recent months by some Opec members

“All the foregoing indicates a shift in market sentiment causing downside risks to the global oil market outlook,” a statement said.

The effect of the measures, according to Algerian Oil Minister Chakib Khelil, who chaired the meeting, will be a cut of about 520,000 barrels a day.

“Actions [to curb output] will be taken by members as soon as they can, that means in the next 40 days,” he said.

Opec members will re-assess the situation when the meet again at the end of the year.

The BBC’s Bethany Bell in the Austrian capital says the move is a compromise meant to avoid new turmoil in the oil markets, but it also reflects Opec’s attempts to stop the recent falls in global prices.

News reported by The BBC

Brent crude has fallen below $100 a barrel for the first time since April, as traders predict Opec will stick to current output levels.

With Opec now meeting in Vienna to discuss forthcoming production, Saudi Arabia has already hinted that it sees no need for a cut.

Brent ended Tuesday trading down $4.14 to $99.30 a barrel, while US crude settled down $3.08 to $103.26.

Prices have sunk from a record of more than $147 a barrel seen in July.

Before the meeting, the Venezuelan energy minister said he would support keeping production levels unchanged.

“We need to keep things as they are,” said Rafael Ramirez.

Growing demand

Earlier, the Saudi oil minister Ai al-Nuaimi said: “The market is fairly well balanced.”

“Inventories are in a healthy position, everything is in balance.”

OPEC members including Kuwait and the United Arab Emirates, have called for no change in output levels though Algeria, Iran, Venezuela and Libya have suggested a cut is needed – claiming the market is oversupplied.

Opec is currently thought to be producing about a million barrels per day (bpd) more than its official ceiling of 29.67 million bpd.

In May and June Saudi Arabia agreed to increase production by 500,000 bpd to help calm markets.

Opec produces about 40% of world crude.

In July, the exporters’ group said world demand for oil would grow by 50% between now and 2030 as people in developing countries drive more cars.

News reported by The BBC

Gold fell to below $800 an ounce for the first time since December 2007 while aluminium prices hit their lowest in some six months. Copper also fell.

The price of commodities has fallen on speculation that demand will slow amid a global slowdown.

Another factor has been the stronger dollar, which has reached a half-year high against the euro.

As economists see improved prospects for the US economy, the dollar becomes more attractive as an investment.

And as the dollar becomes more attractive, particularly in times of crisis, gold has lost its lustre, as have other precious metals.

And industrial metals have been hit even harder.

Three-month copper dropped to an intra-day low $7,185 per tonne.

The metal, which is largely used in the building sector, had fallen to its lowest in six months earlier in the week at $7,120.

“There is still cope for copper prices to fall another 10%, or so, part of that is function of China’s growth slowing,” said Daniel Brebner, of UBS.

Oil was also down, after oil producer group Opec forecast lower demand for the fuel.

Crude oil slipped $1.61 to below $114 a barrel while Brent oil slipped $1.69 $111.99 a barrel.

“Worries about an economic slowdown in the US and Europe, and even Japan, are weighing on the oil market,” said Victor Shum, an analyst with consultancy Purvin & Gertz.

News reported by The BBC

A serious oil supply crisis is looming, which could push prices above $200 a barrel, a think tank has warned.

A “supply crunch” will affect the world market within the next five to 10 years, the Chatham House report said.

While there is plenty of oil in the ground, companies and governments were failing to invest enough to ensure production, it added.

Only a collapse in demand can stave off the looming crisis, report author Professor Paul Stevens said.

“In reality, the only possibility of avoiding such a crunch appears to be if a major recession reduces demand – and even then such an outcome may only postpone the problem,” he said in The Coming Oil Supply Crunch.

Lack of funding

Prof Stevens warned that investment in new oil supplies has been inadequate as oil firms prefer to return profits to shareholders rather than reinvest it.

Furthermore, oil producing cartel Opec has failed to meet plans to expand its capacity since 2005.

He also argued that a “resurgence of resource nationalism” means that governments are “starving” their national oil companies of investment by excluding international oil firms from helping to develop capacity.

“While the forecast is controversial and extremely bullish, even allowing for some increase in capacity over the next few years, a supply crunch appears likely around 2013,” he added.

“The implication is that it will quickly translate into a price spike although there is a question over how strategic stocks might be used to alleviate this.”

Unpopular measures

However, Prof Stevens does conclude that only “extreme policy measures could achieve a speedy response” in boosting supplies and lowering oil prices – a move that is likely to be “politically unpopular”.

Other, longer-term moves suggested by the report include offering support to help oil-exporters to manage “resource curse” – where an abundance of natural resources can damage a country’s economy – and allowing Opec to join the International Energy Authority’s emergency sharing scheme.

The report comes just days after oil prices slipped from peaks near $150 a barrel.

News reported by The BBC

ALGIERS (Reuters) – OPEC member Algeria unveiled details of its 7th exploration and production licensing round on Sunday, inviting prequalified companies to bid for acreage with what it called high petroleum potential.

The deadline for bids for 16 zones containing 45 blocks was 1000 (0900 GMT) on 3 December 2008 and the winners would be announced two hours later at 1200 (1100 GMT), a statement on the Energy and Mines Ministry website said.

The contracts will be signed on 17 December 2008, the statement said, adding companies may bid to become an operator and/or an investor.

The round, the first since April 2005, has been keenly awaited by multinational companies seeking permits to explore in Algeria, which is among the world’s top owners of oil and gas reserves and a major gas exporter to Europe.

“The selected zones are in different Algerian sedimentary petroleum basins offering a high potential in petroleum resources,” said the statement by the ministry’s National Agency for the Valorisation of Hydrocarbon Resources (ALNAFT).

The round is the first to be offered under a 2006 law that gives state energy conglomerate Sonatrach a mandatory minimum 51 percent share in every oil and gas exploration contract awarded to foreign companies.

British Petroleum (BP.L: Quote, Profile, Research), Amerada Hess (HES.N: Quote, Profile, Research), Statoil (STL.OL: Quote, Profile, Research), Anadarko Petroleum Corp. (APC.N: Quote, Profile, Research), Repsol (REP.MC: Quote, Profile, Research) and Total (TOTF.PA: Quote, Profile, Research) are the main foreign companies involved in exploration and production of hydrocarbons in Algeria.

The statement said prequalified companies would receive a general technical presentation on 23 July, and data rooms of detailed information on each project would be open in two sessions from August 2 to 13 and September 1 to October 15, 2008.

News reported by Reuters

The price of crude oil has retreated slightly after hitting record highs above $142 a barrel, amid concerns that supply will not meet demand.

In London, Brent crude was trading at $140.16, having earlier hit $142.13.

New York light crude had climbed as high as $142.26 a barrel, but later fell back to $140.34.

Producers’ group Opec has been under pressure to boost production, though recent reports have shown its members are split over whether to lift output.

Libya has threatened to cut production because the market is well supplied.

Libyan threats

Libya’s most senior oil official, Shokri Ghanem, said on Thursday he was looking into the possibility of cutting production in response to US threats against oil producers.

Analysts blame the price of crude on a variety of factors from basic supply and demand to hedge funds.

Opec has said speculators have played a part in the oil spike this year, but others are not convinced.

“We believe the factors driving oil prices higher are fundamental and not speculative,” Deutsche Bank said in a research note.

“Oil needs to rise to $150 a barrel for oil as a share of global Goss Domestic Produce to reach the levels that occurred in the early 1980s,” according to the bank.

But tensions between oil consumers and producers are rising.

The US House of Representatives has passed a bill that would allow the Justice Department to sue Opec members for limiting supplies.

But the bill has yet to be backed by the Senate and the White House has already said it would veto the bill.

There was also scepticism about whether there will actually be a cut in Libya, because of soaring prices.

“I doubt that any real effort in cutting output would be forthcoming, considering that pricing continues to hit new records,” said Victor Shum, an analyst at Purvin & Getz.

‘Radically new level’

Meanwhile, the chief executive of Gazprom, Alexei Miller, has been talking down the influence of Opec.

Saying that Opec had no real impact on prices, he told the Financial Times: “Not a single decision has been passed of late that would really influence the global oil market.”

He also said that the world was undergoing “a great surge in oil and gas prices, which will end with prices at a radically new level”.

Mr Miller predicted that Gazprom would become the most influential company in the energy business.

On Friday, the firm approved the replacement of former chairman Dmitry Medvedev, who is now Russian president, with former prime minister Viktor Zubkov.

News reported by BBC