Prices tumbled after Saudi Arabian Oil Minister Ali al-Naimi said that the Organization of Petroleum Exporting Countries should trim output by 2 million barrels a day, on his arrival in Oran, Algeria, before the meeting. Demand will shrink next year, OPEC said in a monthly report today.
Crude oil for January delivery fell 77 cents, or 1.7 percent, to $43.74 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices have tumbled 70 percent from a record $147.27 on July 11.
Oil prices extended declines after the Federal Reserve cut the main U.S. interest rate to a target range” of between zero and 0.25 percent, and said it will do whatever is necessary to ease the longest recession in a quarter-century.
OPEC members and other producers, such as Russia, are under increasing pressure to reduce supplies as oil’s $100-a-barrel collapse cuts export revenue, creating budget shortfalls.
World oil use in 2009 will drop by 0.2 percent to 85.68 million barrels a day, the OPEC secretariat said in the report. That’s 1 million barrels a day lower than forecast last month.
U.S. crude-oil inventories probably rose 600,000 barrels last week, according to the median of 11 responses in a Bloomberg News survey conducted before an Energy Department report tomorrow. The report will probably show that supplies of gasoline and distillate fuel, a category that includes heating oil and diesel also increased.
Brent crude oil for January settlement declined 10 cents to $44.50 a barrel on London’s ICE Futures Europe exchange.