OPEC Set to Lower Oil Production in Feb.

Ammuna Lawan Ali, Nigerian Governor for OPEC, arrives at the venue of the OPEC meeting in Abuja, Nigeria, Wednesday, Dec. 13, 2006. OPEC nations weighed a report published Wednesday suggesting no new output cuts were needed to keep oil prices stable. But some members remained unconvinced on the eve of their year-end meeting.(AP Photo/George Osodi) (George Osodi - AP)

A volatile market also left OPEC jittery, with prices peaking at $78.40 a barrel in July, then plunging toward $55 last month before rising to present levels in the low $60s _ just above the tolerance zone for most member nations.

Plenty of ministers were demanding immediate action. Two months after OPEC agreed to reduce production by about 4 percent, that cutback has still not yet been fully implemented. The IEA _ the developed world's energy watchdog _ says OPEC is producing about 780,000 barrels less, or 28.9 million barrels a day in November. Excluding Iraq, which is exempt from quotas, the group produced 27.1 million barrels a day.

"There is still some imbalance," said Iran's oil minister, Kazem Vaziri Hamaneh, whose country had held out for a cut effective immediately, along with Venezuela and Algeria.

Ehsan Ul-Haq, chief analyst at Vienna's PVM Oil Associates, said that by the start of the new year close to 100 million barrels would have been pared from inventories, so Thursday's action was clearly an effort at controlling prices well into 2007.

"I think OPEC is thinking of second quarter demand" next year, he said, once the traditionally high-use Northern Hemisphere winter has ended. He said he expected world demand then to fall by 2 million barrels a day.

"Over $60, OPEC is nervous about doing anything," said oil analyst John Hall, suggesting that higher prices could lead OPEC to shelve the February plan.

Ul-Haq also said OPEC "might reconsider their decision, if at the end of December prices have risen."

"Ultimately ... prices are likely to be influenced more by the weather than by the OPEC decision," he said.

But some OPEC ministers said the cut would definitely be implemented. Oil taps would be tightened come February "irrespective of the price" of crude oil at the time, said Qatar's oil minister Abdullah bin Hamad Al Attiyah.

Separately, the meeting also approved Angola as the 12th member of the organization. Daukoru said Angola would join Jan. 1 but would not participate in the envisaged February cuts.

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Associated Press Writer Dulue Mbachu contributed to this report.

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