Oil Prices To Stabilise From January

Many organisations of the Petroleum Exporting Countries (OPEC) member states have started reducing oil supply in line with the group's biggest-ever output cut agreed earlier this month, and crude prices are expected to begin stabilising within the next two months, OPEC President, Chakeb Khelil, has said.

Oil prices were at $37.69 in London on Friday and $40 last Monday.

And yesterday, the commodity fell below $40 as demand concerns overshadowed Middle East conflict.

 By 0504 GMT, US crude was down 24 cents at $39.78 a barrel, after having gained almost one per cent earlier in the day. London Brent fell 34 cents to $40.21.

Oil is heading for a loss of nearly 60 per cent this year, its biggest annual fall since futures began trading 25 years ago.

"People are still wary of the global economic problems. There is still pessimistic news coming out of the States," said Gerard Rigby, an Analyst at Fuel First Consulting in Sydney.

"Many countries have implemented the reduction. I think all of them will implement it,  because they do not have a choice," Khelil told Algerian state radio.

The OPEC agreed on December 17 to reduce supplies by 2.2 million barrels per day.

"I think this reduction will have an impact on prices in January-February because it is a strong reduction," Khelil said.

"We seek to stabilise the price and prevent it from falling further. I think we will reach this stabilisation in January-February, God willing," he added, but gave no forecasts for prices in the next two months.

Khelil, also Algerian Energy and Mines Minister, said he expected the level of stocks to be brought to 52 days by the end of 2009.

"I think the organisation will be stronger in the future. OPEC, with 40  per cent of the world's oil currently, may have 50 per cent within 10 years," he said, citing falling oil reserves in some non-OPEC countries. — Reuters