Despite large output cuts by OPEC, crude oil dip on forecast of lower demand

OPEC has trimmed its global demand estimate for 2009 by 20,000 barrels to 85.66 mln bpd, bringing the year's reduction to 180,000 bps, or 0.2%. Reports that consumption of OPEC crude will contract 4.2% to 29.5 mln bpd have pulled down oil prices. A global recession, encompassing USA, Europe, Asian countries including China, increases prospects of negative oil demand. The global downturn is hindering efforts by large OPEC members to boost prices of crude amid dwindling demand. As a result, despite OPEC members enforcing production cuts, crude oil for February delivery fell to US$35.40 on the NYMEX. Brent crude oil for February settlement dipped to US$44.6 on London's ICE Futures Europe exchange, while March Brent contract rose to US$47.68 a barrel. OPEC's 12 members announced last month, the group's largest supply cut of 2.2 mln bpd, after pledging to cut 2 mln bpd in the autumn. Now, Saudi Arabia has plans to reduce output to 7.7 million bpd, its lowest level since 2003. Other OPEC members, including Venezuela, are calling for another round of cuts when the group meets next in March. However, the global economic downturn continues to defeat OPEC actions.
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