Oil Prices too Low - OPEC

Summary: After oil prices fell nearly $50 per barrel on Monday, the Organization of Petroleum Exporting Countries (OPEC) warned companies that new investments in crude oil will not be a good venture and may even result to massive losses.

Meanwhile, OPEC cut its oil production to more than 4 million barrels per day since October 2008 after the demand fell.

After oil prices fell nearly $50 per barrel on Monday, the Organization of Petroleum Exporting Countries (OPEC) warned companies that new investments in crude oil will not be a good venture and may even result to massive losses.
 

In Singapore trading, the oil price fell by $1.12 settling to $50.43 per barrel.

According to earlier report, OPEC cut its oil production to more than 4 million barrels per day since October 2008 after the demand in US which is the world’s biggest oil consumer fell 6 percent to 19 million barrels per day last year.

OPEC cut its output saying that overproduction of crude oil will result to low prices and possible bankruptcy of investors. Meanwhile, some governments warned the oil-producing companies that cutting production may even aggravate the global financial crisis.

In a statement, OPEC secretary-general Abdalla el-Badri said that $50 per barrel will not be “sufficient enough for new investment”, adding that oil price of $70 per barrel is the viable rate in the market to urge companies to make investments.

el-Badri’s statement is contradicted by Kuwaiti Oil Minister Sheik Ahmed Al Abdullah Al Sabah who said that oil price of $50 per barrel is considered reasonable given the economy’s weak condition.