Azerbaijan, Baku, 25 October / Trend corr. A.Badalova/ The special meeting of OPEC, at which it was decided to reduce oil production by 1.5mln bbl per day, will not bring the desirable result. The cartel, on which great hopes had been pinned, again demonstrated its incapability to manage the situation in oil market.
The only aim of the meeting remained was not reached, and oil prices reached a new minimal level of the recent 16 months, having ignored the decision of OPEC.
The cost of December futures for American WTI oil dropped by $4.71 to $63.13 per bbl.
Russian analytics believe OPEC's decision to reduce production can not prevent prices from further drop. Pavel Sorokin, an analyst of the YuniKreditAton company, which is a part of international financial UniCredit Group, believes reduction of oil production of OPEC is unlikely to have a positive impact on oil market.
Reduction of capacities not production can influence oil prices, Sorokin told Trend in a telephone conversation on 24 October.
"OPEC cuts current production, but leaves capacity. When the prices increase, OPEC can restore its production at any moment. Previous reduction of production by OPEC did not affect the market. Only short-term changes were observed," Sorokin said.
At its September conference, the organization had to make the decision to reduce oil production by 520,000 bbl to 28.8mln bbl per day to keep the price at $100 per bbl.
Sorokin forecasts reduction of the number of expensive projects, including deep-water drilling and development of oil-bearing sands.
"Such projects become unprofitable and they will be suspended. That will be a real reduction of capacities," Sorokin said.
The main factor now influencing oil prices is fear of reduction of demand and the global recession, said Sorokin.
The International Energy Agency (IEA) negatively reacted to OPEC's decision to reduce production. The decision is useless and was made under the conditions of serious recession threatening consumers of oil, said IEA representative Eduardo Lopes.
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