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OPEC may cut output to prop up oil prices

OIL prices moved little yesterday even after Organization of Petroleum Exporting Countries members talked up more production cuts at the weekend amid weakening global demand for crude.

Light sweet crude for March delivery fell 6 US cents to US$37.45 a barrel by midday in Singapore on the New York Mercantile Exchange. The contract rose US$3.53 on Friday to settle at US$37.51.

OPEC has implemented most of the of output reductions of 4.2 million barrels a day announced since September but the cuts have been overtaken by a collapse in crude demand amid the global slowdown.

On Sunday Mohammed Saleh al-Sada, Qatar's Minister for Energy and Industry Affairs, said OPEC is ready to cut output further when it meets next month. Al-Sada said a reasonable price for oil would be US$70 a barrel.

Even within OPEC, however, there is skepticism over whether reducing supply will spur higher prices.

Moussa Marafi, a high-ranking Kuwaiti oil official, told Annahar newspaper in comments published on Sunday that crude prices are unlikely to rise above US$40 per barrel, even if OPEC decides to cut as much as 2 million barrels per day next month.

"Another big OPEC cut could add US$5 to the price but it's not going to send it to US$70," said Clarence Chu, a trader at market maker Hudson Capital Energy in Singapore.


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