OPEC May Slash Crude Output To Remove 'Extra Supply'

October 19, 2008 3:56 p.m. EST

Tehran, Iran (AHN) - Iran indicated on Sunday that 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 seventh month in 2008.

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

A light sweet crude-futures barrel for November delivery had dropped below $70-a-barrel mark $69.85 on the New York Mercantile Exchange on Thursday.

On Friday, the contract rebounded and closed above $70 a barrel in New York after report from the OPEC revised its global oil demand growth forecast for this year down by 330,000 barrels a day.

The Vienna-based organization has also slashed its forecast for average oil demand in 2009 by 450,000 barrels a day, or 0.5 percent, to 87.21 million barrels a day.

On Sunday, Iran's OPEC governor Mohammad Ali Khatibi said the crude producers' cartel is likely to roll over the existing levels when the group meets next Friday in Vienna, Austria. The OPEC meeting was moved up from its initial meeting date in the month of November.

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.