Oil prices rise as Opec cuts production

Wednesday 10th September 2008

Opec is to cut oil production to 2007 levels in a bid to stop falls in prices.

The body representing oil producing economies decided to cut production by 520,000 barrels a day.

Falling demand for oil as world economies slow and a raise in surpluses had seen oil prices fall in recent months from the peak of $147 a barrel in July to $102.

In response to the Opec decision, Asian trades saw oil prices rise to $104 a barrel, a price matched by that of October US light crude futures.

"It noted that prices have dropped significantly in recent weeks, driven by a weakening world economy, in particular in major OECD countries, with its concomitant lower oil demand growth, coupled with higher crude supply, a strengthening of the US dollar and an easing of geopolitical tensions," an Opec statement read.

"All the foregoing indicates a shift in market sentiment causing downside risks to the global oil market outlook."
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