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Oil falls despite Opec output cut | Oil falls despite Opec output cut |
(about 1 hour later) | |
Brent crude has fallen back below $100 a barrel as signs of weaker global oil demand has offset Opec's surprise decision to reduce output levels. | Brent crude has fallen back below $100 a barrel as signs of weaker global oil demand has offset Opec's surprise decision to reduce output levels. |
Despite initially rising following Opec's announcement, Brent lost $1.37 to $98.87 a barrel. | |
US crude also ended lower, falling 68 cents to settle at $102.58. | |
After talks in Vienna, Opec's member states decided to cut daily production levels by 520,000 barrels, starting within 40 days. | After talks in Vienna, Opec's member states decided to cut daily production levels by 520,000 barrels, starting within 40 days. |
'Changing lifestyles' | 'Changing lifestyles' |
While the news initially saw oil prices rise, they then fell back, helped by the International Energy Agency (IEA) cutting its estimate for global oil demand this year and next. | While the news initially saw oil prices rise, they then fell back, helped by the International Energy Agency (IEA) cutting its estimate for global oil demand this year and next. |
Opec appear genuinely concerned that the bottom is falling out of global demand Energy analyst Antoine Halff | |
The IEA - which had asked Opec to keep its output unchanged - said consumers in industrial nations were changing their lifestyles in response to high prices. | The IEA - which had asked Opec to keep its output unchanged - said consumers in industrial nations were changing their lifestyles in response to high prices. |
Oil's fall from the record prices seen in July has helped the US dollar, which hit an 13-month high against the euro on Tuesday. | Oil's fall from the record prices seen in July has helped the US dollar, which hit an 13-month high against the euro on Tuesday. |
The price of crude has since fallen by nearly 30% as a global economic slowdown has reduced demand for oil. | The price of crude has since fallen by nearly 30% as a global economic slowdown has reduced demand for oil. |
Opec members will re-assess production levels when the meet again at the end of the year. | Opec members will re-assess production levels when the meet again at the end of the year. |
The 13-nation group, whose members include Saudi Arabia, Iran and Venezuela, has around two-thirds of the world's known oil reserves. | The 13-nation group, whose members include Saudi Arabia, Iran and Venezuela, has around two-thirds of the world's known oil reserves. |
Hurricane background | |
Energy analyst Antoine Halff said Opec was worried about falling global oil demand. | |
"The ministers appear genuinely concerned that the bottom is falling out of global demand," he said. | |
"Their panic is a testament to how soft the market has become. It is likely to grow even softer." | |
Another factor oil traders are having to consider is the latest hurricane in the Gulf of Mexico. | Another factor oil traders are having to consider is the latest hurricane in the Gulf of Mexico. |
Hurricane Ike has strengthened to a category two story and is on target to hit the Texas coast on Saturday. | Hurricane Ike has strengthened to a category two story and is on target to hit the Texas coast on Saturday. |
Some oil facilities in the Gulf of Mexico have been evacuated as a precaution. | Some oil facilities in the Gulf of Mexico have been evacuated as a precaution. |