OPEC expected back crude supply cut

SAN FRANCISCO (MarketWatch) — OPEC is expected to make a formal announcement Monday to cut 1 million barrels a day from crude supplies — the first such reduction in two years — according to a published report.

A story from Reuters on Sunday quoted OPEC President Edmund Daukoru as saying there was a general consensus for the cut. Iran, OPEC’s second biggest producer, and Algeria on Sunday publicly backed the plan, Reuters noted.

An OPEC source told Reuters Daukoru had written to oil ministers in the past two days seeking support for the supply curbs.

Seeking some clarity amid reports of a possible OPEC cut, crude-oil futures closed lower Friday, suffering a loss of 5% for the week. Crude for November delivery fell 27 cents to close at $59.76 a barrel on the New York Mercantile Exchange, after falling to a low of $58.85. It was down $3.15 from the week-ago closing level of $62.91.

“I can’t recall a time when there were so many mixed signals out of OPEC,” said James Williams, an economist at WTRG Economics.

The OPEC president, along with Iran, said the 11-member group would make the cuts from an official 28 million bpd ceiling — a move that could lead to tricky negotiations over a realignment of OPEC quotas.

The Organization of the Petroleum Exporting Countries is due for a scheduled meeting in mid-December, but some members want to hold an emergency session this month to formalize the cut, according to the Reuters report.

Daukoru said he was not in favor of an emergency meeting. Reuters reported Daukoru said OPEC countries could implement cuts next time they set their monthly sales volumes to their customers.

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