OPEC Decides on Output Cut, Sends Oil Prices Higher

OPEC ministers meeting in Nigeria have announced a production cut of 500,000 barrels per day from February 1 and welcomed in new member Angola, the second-biggest oil producer in sub-Saharan Africa.

The announcement of a second output cut in two months followed warnings that a further reduction could spark sharply higher prices in the coming months, the peak time for oil demand during the northern hemisphere winter.

In New York a barrel of light sweet crude for delivery in January showed a gain of 83 cents at 62.20 dollars at about 15H00 GMT Thursday.

OPEC members appeared particularly concerned about high oil inventories in rich countries, which Algerian Energy Minister Chakib Khelil said were "the same level as in 1998" -- the last time oil prices crashed to 10 dollars per barrel.

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"The conference decided to reduce curent OPEC production by 500,000 bpd with effect from February 1, 2007, in order to balance supply and demand," the final statement from OPEC said.

At a gathering in October, the Organisation of Petroleum Exporting Countries decided to cut its output by 1.2 million bpd from the beginning of November, meaning the total reduction called for by the group is 1.7 million barrels.

The 11-member group, which produces about 40 percent of global oil supplies, accepted an application for membership from African producer Angola at the meeting on Thursday.

Angola, which has fast-growing production in the Gulf of Guinea in West Africa, is to join in January.

"The level of stocks is very high, they are at the same level as in 1998," he added.

Source: AFP

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