Commodity Daily News

Saudi Arabia Comes in Line with OPEC; Cuts Production

Crude Oil prices rallied earlier on Monday as China's launch of a near-600 billion Dollar economic stimulus plan offset concerns about the global economy. The price of Crude Oil also rose 2% following Saudi Arabia's announcement that it will cut its Oil production. Saudi Arabia told refiners in Asia that it would cut December supplies by 5%, signaling its adherence to an OPEC plan to cut output across the board. Signs that Saudi Arabia was making good on the OPEC deal helped give beaten-down Oil prices a brief boost last week, but by Friday they had fallen back to below $60 a barrel for the first time in a year-and-a-half.

Oil prices plunged more than $80 from a record $147.27 a barrel in July as U.S. fuel use slumped to the lowest in nine years. Moreover China's economy, which is one of the largest Oil consuming nations, is expanding at the slowest pace since 2003 as the credit crunch spread to the world's fastest-growing energy consumer. As the threat of the worst economic recession since World War II continues to destabilize fuel consumption, the International Energy Agency (IEA) may cut its 2009 Oil demand forecast for a third month in a row. The IEA already cut its 2008 forecast about 1.3 million barrels a day in seven revisions this year. OPEC cited falling demand for its Oct. 24 decision to reduce production by 1.5 million barrels a day. OPEC forecasts 87.2 million barrels a day, the same as the IEA's assessment and is scheduled to release its monthly report on November 17.