‘Oil Falls as Saudi Arabian Minister Fails to Endorse OPEC Cut’
By Alexander Kw’atkowsk” Oct. 23, 2008 (Bloomberg) – Crude oil fell, giving up earlier gains, after Saudi Arabia failed to endorse Iran’s call for an OPEC production cut when the group meets tomorrow. Oil prices lost earlier gains after the oil minister of’ Saudi Arabia, the group’s biggest producer, declined to express his support for a possible cut on his arrival in Vienna. Iranian Oil Minister Gholamhossein Nozari had earlier called for the group to slash production by 2 million barrels a day.“OPEC’s major problem is that they have never faced a demand-led surplus before,” David Hufton of London-based PVM Oil Associates Ltd. sa’d ‘n an e-mailed note today. “Cutting’ supply when the other leg is being cut off faster does not restore the balance.” Crude o’l for December delivery fell as much as 85 cents, or 1.3 percent, to $65.90 a barrel on the New York Mercantile Exchange. The contract traded at $66.88 at 1:57 p.m. London time. It earlier rose as much as $1.75 to $68.50 a barrel. “Who said anything about a cut?” Saudi Arabia’s Ali al-Naimi said when asked whether he supports the possibility of the group agreeing to reduce output when it meets tomorrow. “Prices will be determined by the market.” Prices have more than halved since rising to a record $147.27 on July 11 on concerns that the global economic slow down will cut oil demand. Yesterday, futures fell $5.43 to $66.75, the lowest settlement since June 13, 2007. U.S. Demand Falls U.S. fuel demand during the past four weeks was down 8.5 percent from a year ago, according to an Energy Department report yesterday. Gasoline demand averaged 8.8 million barrels a day in the past four weeks, down 4.3 percent from the same period last year, the report showed.The global economy w’ll be in a recess’on through most of next year as weak demand ‘n the U.S. spreads to Europe and beyond, Dow Chem’cal Co. Ch’ef Executive Off’cer Andrew Liveris said in a telephone interview today. “The rate of reduction in demand is good for cutting,” Iran’s Nozari told reporters today. Brent crude oil for December settlement fell as much as 52 cents, or 0.8 percent, to $64 a barrel on London’s ICE Futures Europe exchange. It traded at $64.51 at 1:45 p.m. local time.