The oil price stayed well below the OPEC preferred price band of $22-28 a barrel in late October, as Venezuelan President Hugo Chavez toured the world, lobbying non-OPEC producers to restrict their output (see Cover Story). The oil market is suffering from poor demand and a surfeit of supply, with non-OPEC production on the rise.
OPEC members are considering a production cut, to be decided at the organisation's 14 November Vienna meeting, to defend the price. OPEC is already pumping about 1 million barrels a day (b/d) above its quota and analysts warn that it is in danger of losing market credibility. Saudi Petroleum & Mineral Resources Minister Ali Naimi was due to hold meetings with non-OPEC producers Oman and the UAE in late October to push for output freezes.
The US government Energy Information Administration on 23 October released data confirming the picture of falling demand. It recorded a rise in crude oil inventories of 2.8 million barrels and an increase in distillates of 900,000 barrels. Government figures show oil demand in the US to have fallen by 4 per cent to 19.1 million b/d since the 11 September attacks on New York and Washington. The fall in demand is attributed to the world economic slowdown.
The price of benchmark Brent crude on 24 October was $20.64 a barrel, while OPEC's basket of crudes was valued on 23 October at $19.36. It was the 21st consecutive day the price has been below the bottom end of its target band.