OPEC disagreement a factor in oil drop
Lower retail sales and a big jump in jobless claims all add up to a slackening demand for oil. Another factor for the near record-breaking drop: trouble within the ranks of OPEC. Stephen Beard reports.
Stacks of empty barrels used to hold fuel in Baghdad (Ali Al-Saadi/AFP/Getty Images)
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Steve Chiotakis: Another number people are keeping an eye on: the price of oil. It's low. As low as it's been in years -- down 20 percent since last week alone. That's a big, near-record-breaking drop, as our man in London, Stephen Beard, reports.
Stephen Beard: More dismal economic data from the U.S. has put the skids under the price of crude. Lower retail sales and a big jump in jobless claims have taken their toll. That all adds up to rapidly slackening demand for oil.
But there's another factor at work: disarray in the ranks of OPEC. Members of the cartel met a week ago, but failed to agree a cut in production which might have helped prop up the price.
They'll have another go later this month, says oil trader Rob Laughlin:
Rob Laughlin: OPEC meets again in Algeria on the 17th of December. And they're going to have some serious, serious work to do to try and rectify falling prices.
Some analysts say that the cartel will have to cut production by at least two million barrels a day to stop the price of oil falling further. Without such a cut, crude could slip beneath the psychologically significant level of $40 barrel.
In London, this is Stephen Beard for Marketplace.
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From Long Valley,, NJ, 12/05/2008
The current price of Nymex crude (it hit $40.50 low on 12/5/08),has nothing to do with demand. It is the hedge funds that that are selling it short for instant and sizable profitering. To stop this abuse, production has to be cut by 1 MB/d to bring the price to $55, by 1 1/2 MB/d to bring it to $65.
by 2 MB/d for $75, all this before year
end if the cuts are done on 12/17/08.
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