Crude Oil Settles Below $44 on Skepticism of OPEC Cuts
Saudi Arabian Oil Minister Ali al- Naimi said that a 2 million barrel per day cut was likely.
“You know that supply is somewhat in excess of demand, inventories are also higher than normal, therefore to bring things in balance, there will be a cut in production of about 2 million barrels,” said Naimi.
U.S. light, sweet crude traded down 90 cents to settle at $43.60 a barrel. Prices have tumbled 70 percent from a record $147.27 on July 11.
The U.S. Federal Reserve cut its target for overnight interest rates to zero to 0.25 percent, in what is being seen as a further sign that the economic slump is far from over. The cut of 75 points instead of the expected 50 points is being seen as an alarm by the Fed that the economy may be in worse shape than at first thought, which would translate to an even lower demand for crude oil.
World oil use in 2009 will drop by 0.2 percent to 85.68 million barrels a day, OPEC said in a report today.