MercoPress. South Atlantic News Agency

OPEC to cut excess production next January

The Organization of Petroleum Exporting Countries, OPEC, agreed Friday to eliminate the excess production that has enabled oil prices to drop from its recent historic highs.

OPEC ministers decided to cut the one million barrels per day above their official quota production as of next January, with a second meeting at the end of January to consider further measures if market conditions so demand it.

Saudi Arabia's Oil Minister Ali al-Naimi, OPEC's main producer confirmed that the one million bpd reduction becomes effective next January 1, and "this will help stabilize world oil prices".

The announcement is not good news for consumer countries in the northern hemisphere which had requested OPEC to keep the current level of production until inventories were normal with the purpose of not affecting economic growth and reducing price volatility.

Crude is currently 30% above prices at the beginning of the year, although the US crude has lost almost 13 US dollars since the record 55,67 US dollars at the end of October.

Heating oil reserves remain low in the main consuming countries and the situation could worsen with a severe, prolonged winter in the northern hemisphere.

However Minister Ali al-Naimi wants to eliminate the excess production fearing that an increase in inventories during winter time could depress prices at the beginning of next year after the winter is over, reports the Arab newspaper al-Hayat.

"The concern of oil production countries with a precipitated fall in prices is somehow exaggerated", said the International Energy Agency, which advises industrialized countries on energy policies.