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OPEC mulls cutting output as oil prices fall below $83

October 16, 2014, 11:21 UTC+3 LONDON
OPEC is scheduled to hold a ministerial meeting on November 27 to discuss reducing oil production in an effort to stop falling oil prices and return them to the benchmark of $100 a barrel
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© EPA/WU HONG

LONDON, October 16. /TASS/. The prices for Brent crude, which defines the sale price for the Russian Urals oil, tumbled below $83 a barrel in London trading on Thursday, increasing the chances for the oil cartel OPEC to reduce output for the first time since 2008.

Brent for November settlement, which expires on Thursday, declined 1%, to $82.91 a barrel on the London-based ICE Futures Europe exchange. Over three months, the prices for Brent crude fell by 24%, from $108.77 a barrel.

The Organization of the Petroleum Exporting Countries (OPEC) is scheduled to hold a ministerial meeting on November 27 in Vienna to discuss reducing oil production in an effort to stop falling oil prices and return them to the benchmark of $100 a barrel.

Barclays analysts say that daily supply needs to be cut by at least 1 million barrels. OPEC, which supplies 40% of the world's oil, pumped over 30 million barrels a day last month.

OPEC ministers have so far reached no consensus on reducing oil output. While Venezuela and Iran support the proposed measure, Kuwait sees no possibility of coordinated oil output reduction in OPEC countries and forecasts that the oil prices will plunge 14% to $76 a barrel.

Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London, told Bloomberg on Wednesday, “We are almost at the floor.” “It’s not in OPEC’s interest to see prices too low for too long a period,” Tchilinguirian said, estimating that Brent will be between $80 and $85 a barrel and could return to $95 by year-end.

Eugen Weinberg, head of commodities research for Commerzbank AG in Frankfurt, told Bloomberg that $80 a barrel is “a solid floor.” “Given the extreme nervousness of the market, we might even drop below this level if OPEC does nothing,” Weinberg said.

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