EU CONDEMNS OPEC OVER PRODUCTION CUT

The European Union (EU) is rankled by Tuesday's announcement by Organisation of Petroleum Exporting Countries (OPEC) that it would cut oil production by 520,000 barrels per day, a development that initially led to a marginal rise in international prices of crude. The EU Commissioner for Energy, Mr Andris Piebalgs, who made this known to energy correspondents in Abuja yesterday, said the action by OPEC, which supplies 40 per cent of global oil output, was not in the interest of EU. However, Brent crude fell back below $100 a barrel yesterday as signs of weaker global oil demand have offset OPEC’s decision to reduce output levels, the BBC reported yesterday. Piebalgs said the EU and OPEC substantially disagreed on that move. “We believe that OPEC should not reduce or increase its production into the market,” he said. “Let market forces determine the price, as we still know that there is very high demand for oil by China and many emerging economies. This practice is what makes the world to look as if OPEC is responsible for high crude prices.” He said the market was still very volatile as a result of many factors, “so OPEC announcing a cut in production is adding to the volatility and is bad for the market”. He stated that too high price of crude and very low price of crude is bad for both the EU and OPEC. “This is one area we disagree with OPEC,” he said, “but I have tremendous respect for the professionals in OPEC, especially for the analytical dept at understanding the fundamentals for oil future.” Crude price shortly before the OPEC meeting slumped by $3.08 to $103.26 a barrel after peaking at $149 in April. But the announcement yesterday led to a marginal rise of about a dollar in crude futures supply. The EU Commissioner of Energy will again address the Press today after meeting with Nigerian Ministers of Energy. But despite initially rising following OPEC's announcement, Brent was down $1.67 to $98.67 by yesterday evening in Europe. US light crude was also lower, falling $1.41 to $101.85 a barrel. After talks in Vienna, OPEC’s member states decided to cut daily production levels by 520,000 barrels, starting within 40 days. 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. 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.