OPEC May Slash Crude Output In September To Remove "Extra Supply"

Tehran, Iran (AHN) - The 13-member Organization of Petroleum Exporting Countries (OPEC) could play a balancing act by cutting down crude output from the existing levels after it slashed down its estimate for global oil demand growth for a fifth month in 2008, reports said.

The news is likely to push up oil prices as crude oil continued to decline on Friday as the market analysts have noticed the increasing balance between supply and demand.

A light sweet crude-futures barrel for September delivery dropped down below $114-a-barrel mark in electronic trading on late Friday.

The contract closed down by $1.24 or 1.1 percent at $113.77 a barrel on the New York Mercantile Exchange after report from the OPEC revised its global oil demand growth forecast for this year down to 1.17 percent from 1.20 percent in July.

Crude oil prices retreated this week to nearly a ten-week low and it has been down over $30, which is the largest weekly drop in years.

Brent North Sea crude for October delivery also declined by $1.13 to $112.55 a barrel in London's ICE futures exchange on Friday. The September contract had expired at $112.64 on Thursday.

According OPEC's latest report, the crude producers' cartel also decided to keep the 2009 forecast for oil demand growth estimate unchanged at 1.03 percent.

"The softening economic situation has led to a further slowdown in oil demand growth," the report said.

The report projected that the global crude demand would rise to 86.90 million barrels per day during this year, which is higher compared to the 86.81 million barrels per day projected in the month of July and added the 2009 level to be at 87.80 million barrels per day.

On Saturday, Iran's OPEC governor Mohammad Ali Khatibi said the crude producers' cartel is likely to roll over the existing levels when the group meets on September 9 in Vienna, according to The Wall Street Journal.

He said that the global market, which gets its 40 percent of its total oil from OPEC, is "oversupplied by at least 1 million barrels a day" and to remove the extra oil in the market, the cartel has to cut oil production.