Oil Prices Stable After OPEC Slashes Output

Crude oil futures stabilized Friday after OPEC cut production by more than expected as the cartel sought to reverse recent heavy price falls in an over-supplied market, dealers said.

New York's main contract, light sweet crude for delivery in November, added ten cents to 58.60 dollars per barrel in electronic deals before the official opening of the US market.

In London, Brent North Sea crude for December delivery eased 12 cents to 60.75 dollars per barrel in electronic trading.

The Organization of Petroleum Exporting Countries, which produces just over a third of the world's oil, said Friday that it would cut current production by 1.2 million barrels per day (bpd) to 26.3 million bpd from November 1.

The announcement, which followed a special meeting in the Qatari capital of Doha, came after OPEC members had suggested that the cartel would carry out a cut of one million bpd in a bid to shore up flagging crude prices.

There had been uncertainty over whether OPEC would reduce output from the quota or current output levels -- which had helped to drive oil prices lower in recent weeks.

The steeper-than-expected reduction to real output would support prices from falling further, dealers said.

"While it would be surprising if the recent high level of market scepticism and misunderstanding about OPEC were to disappear completely and rapidly, we believe that ministers have now put a fairly strong floor under prices," said Barclays Capital analyst Kevin Norrish.

The cartel decided to cut current output, which is below its official quota of 28 million bpd. The official quota remains at 28 million bpd, where it has stood since July, 2005.

Source: AFP

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