Azerbaijan, Baku, Dec. 16/ Trend , A. Badalova/ Western experts say planned reduction in OPEC quota for oil output will not yield anticipated results in term of restoring crude prices.
"I don't think that OPEC can achieve a significant price increase by cutting output; and probably it will not achieve any increase at all," Carlo Stagnaro, director of Energy Department of Bruno Leoni Institute of Italy, said to Trend by e-mail.
In a meeting to be held on Dec. 17 in Algeria, OPEC is expected to decide to dramatically reduce oil output in n attempt to to recover "suitable" level of prices. The output is expected to total 1.5-2mln barrels a day.
Besides members of the organization, non-OPEC countries including Azerbaijan, Oman, Syria and Russia will attend the meeting. Earlier Russia announced its readiness to join OPEC and cut daily oil production.
Stagnaro said support of non-OPEC countries such as Azerbaijan and Russia will not help restore prices. It will have a very short run effect.
To reverse the trend, massive cuts should be made, which is not in the interest of producers themselves, he Stagnaro said.
In fact, today's price trends are led by demand collapse, he added.
According to forecast of IEA, oil demand will drop for the first time for 25 years to 85.8mln barrels a day.
"The problem is how much of the reduction is due to the recession," Stagnaro noted.
"Price will stay this low at least until the end of the recession, but thereafter the trend might turn the other way around and prices might grow again although possibly not up to the record levels of July 2008," head of the Energy Department said.
Analysts of the U.S. Energy Security Analysis say OPEC's reduction of oil quota and increasing oil demand will stop decreasing prices.
However, higher stocks and ongoing concern about demand will limit the price impact, according to ESAI report.
ESAI is forecasting WTI to average $50 per barrel in 2009.
While the cartel has not completely achieved its intended production level, OPEC production did fall by over 700,000 b/d in November," according to ESAI report. ESAI expects production to fall a further million b/d in the coming months.
As a result of session in New York stock exchange, prices of January futures on in WTI decreased by $1.77 to $44.51. In London, January contract on Brent decreased by $0.81 to $44.60 a barrel.
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