OPEC opts to cut production
The oil cartel meeting in Vienna ended with a surprise decision to lower output now that prices are falling. Not everyone sees the decision as a permanent one. Megan Williams has more.
An oil refinery near the southern Iraqi port city of Basra (Ahmad Al-Rubaye/AFP/Getty Images)
More on The Economy, International, Oil
TEXT OF STORY
Bob Moon: The cost of a barrel of oil is once again above the psychological level of $100. The price is up to nearly $104 this morning after a decision from OPEC that was something of a surprise. It capped a five-hour session with an agreement to reduce output in a market it sees as oversupplied. Megan Williams reports.
Megan Williams: Traders expected the oil cartel, which met in Vienna, to keep production steady. Instead, OPEC abided by its own quotas and opted to lower output, which sent oil prices up. Oil prices peaked in July, but since then, demand has slumped. The world economy slowed and oil production rose, which brought the cost down. Commerzbank commodity analyst Eugen Weinberg says he expects the price rise is temporary as demand growth slows in emerging economies.
Eugen Weinberg The demand growth will slow down and this will lead to lower prices because the demand growth from China has been the most important factor behind higher oil prices in the last years.
Most of the production cuts will come from Saudi Arabia, which kept output high this summer.
I'm Megan Williams for Marketplace.
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