Oil prices dip despite Opec cuts
November 1, 2006
Oil prices have fallen in early Wednesday trading, despite the start of agreed production cuts by members of the Opec oil producers' cartel.
Although Opec's 1.2 million barrels per day cut starts on 1 November, analysts said doubts remain over compliance by a number of the group's 11 nations.
US light crude was down 31 cents to $58.42 a barrel, while London's Brent had lost 20 cents to $58.83.
Global oil prices have fallen 20% since hitting record highs in July.
Then oil markets were worried by the conflict in southern Lebanon between Hezbollah militants and the Israeli army.
Further production cuts?
Led by Saudi Arabia, Opec members agreed to cut production last month in an attempt to shore up prices.
However, doubts have remained over whether all Opec members will implement the cuts as some may wish to avoid seeing revenues fall in the short term.
Oil analyst Makoto Takeda of Bansei Securities, said he expected oil prices to eventually return above $60 a barrel.
"It's unlikely that we'll see full implementation, but that's not important because the Saudis have committed to their reduction," he said.
"There is a likelihood of a further cut in December, so traders are nervous about selling further."
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