02/11/2004: 
Breaking News
OPEC to cut oil output by 10 percent
from AP
ALGIERS, Algeria -- OPEC decided Tuesday to cut its excess production of crude immediately and lower output quotas by 1 million barrels a day effective April 1. The surprise move means consumers will continue to face high prices for gasoline and other refined products, analysts said.
The Organization of Petroleum Exporting Countries expects the combined cuts would reduce actual production by about 10 percent, or 2.5 million barrels a day.
OPEC agreed to the two-stage reduction in output to try to keep oil prices stable when warmer weather erodes demand in major importing countries.
The oil group has often urged its members to comply better with their agreed quotas, but its decision to make an additional cut in its official target of 24.5 million barrels was unexpected.
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"It's such a fluid situation," he said "The other side of the equation is whether they're going to stick to their quota, and they never do."
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OPEC to cut oil outout by 10 percent.ALGIERS, Algeria -- OPEC decided Tuesday to cut its excess production of crude immediately and lower output quotas by 1 million barrels a day effective April 1. The surprise move means consumers will continue to face high prices for gasoline and other refined products, analysts said.
The Organization of Petroleum Exporting Countries expects the combined cuts would reduce actual production by about 10 percent, or 2.5 million barrels a day.
OPEC agreed to the two-stage reduction in output to try to keep oil prices stable when warmer weather erodes demand in major importing countries.
The oil group has often urged its members to comply better with their agreed quotas, but its decision to make an additional cut in its official target of 24.5 million barrels was unexpected.
"As time goes on in the second quarter, we will see a drop in demand that will affect prices. If we don't do anything, there will be oversupply in the second quarter of about 3 million barrels (a day)," OPEC president Purnomo Yusgiantoro told a news conference at a government-run convention center in Algiers.
Ministers said they believed their action would send a strong signal about OPEC's willingness to be proactive in managing crude supplies.
"Everybody will know that the organization is serious, and we would like to have a stable market," said Libya's representative, Abdulhafid Mahmoud Zlitni, speaking after a closed-door meeting at which the delegates ratified their output decision.
Oil prices rose. North Sea Brent crude for March delivery rose 93 cents to settle at $30.04 in London, while March contracts for light sweet U.S. crude were up $1.04 to settle at $33.87 on the New York Mercantile Exchange.
By Aki Soga
The announcement that OPEC will cut oil production by 10 percent is likely to translate into higher fuel prices in Vermont, even before the cuts take place, according to people in the local fuel business.
Sometimes it only takes days before a surge in the wholesale market translate into increased retail prices, said Arthur Sears, president of Rogers Fuel Inc. in Middlebury.
"We get prices on a daily basis and those prices are based on what they're trading at," Sears said. "So it shows up almost immediately to the dealer."
The Associated Press reported Tuesday that the Organization of Petroleum Exporting Countries agreed to immediately cut excess production, and further reduce output by 1 million barrels a day on April 1. The combined cuts amount to about 10 percent of current production.
Oil prices were higher after the disclosure, the AP said. North Sea Brent crude for March delivery rose 93 cents to settle at $30.04 in London, while March contracts for light sweet U.S. crude were up $1.04 to settle at $33.87 on the New York Mercantile Exchange.
Shane Sweet, executive vice president and director of the Vermont Fuel Dealers Association said, such a jump in prices is to be expected following news of a production cut.
"You're going to get that hiccup when they make such a claim," Sweet said.
Sears said he doesn't always immediately pass on price increases to his customers because he wants to offer some price stability.
"You try to level the playing field for the customer," he said, "but by the time a week goes by you can see that you're definitely behind then you've got to make it up."
Vermont fuel prices are at their highest since the days leading up to the start of the Iraqi war in March.
In February, home heating oil has averaged $1.59 per gallon and unleaded gasoline $1.68 per gallon, according to the latest monthly fuel price survey from the Vermont Public Service Department. In January, heating oil was $1.42 a gallon, and gas $1.57 a gallon.
In March, heating oil was $1.72 a gallon and gas $1.68 a gallon.
One thing in Vermont consumers' favor is that the production cut comes as the worst of the winter heating season is tapering off taking pressure off of fuel oil prices, Sweet said.
He added that it was hard to tell what the long-term consequences of Tuesday's OPEC announcement might be.
"It's such a fluid situation," he said "The other side of the equation is whether they're going to stick to their quota, and they never do."
