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Oil Prices Fail To Prod OPEC To Produce More

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Oil Prices Fail To Prod OPEC To Produce More

June 10, 2008; Page A10

LONDON — The latest rise in oil prices is doing little to persuade the Organization of Petroleum Exporting Countries to boost output, as it repeats its mantra that the slumping global economy will push demand lower this year.

Despite Friday’s jump to more than $139 a barrel, OPEC officials have latched on to reports pointing to a fall in crude-oil demand as sharply higher energy and commodity prices and cooling housing markets take their toll on consumers world-wide.

Crude-oil futures fell $4.19, or 3%, to settle at $134.35 a barrel Monday on the New York Mercantile Exchange. (Please see related article.) On Friday, the U.S. government reported a sharp increase in the unemployment rate, raising fears of a recession in the world’s biggest economy and energy consumer.

[Shokri Ghanem]

“Where is the demand going?” Shokri Ghanem, Libya’s top oil official, said in an interview. “It keeps going down. People need to look at that. Why would we produce more?”

Saudi Arabia, which Monday proposed a meeting between oil producers and consumer states, said high prices aren’t justified by market data and fundamentals. A Gulf-nation OPEC official said the 13-country cartel “will provide what the market wants…. We don’t think more oil will lower prices, anyway.”

OPEC, which produces about 40% of the 87 million barrels consumed a day world-wide, is set to meet in September. The International Energy Agency has slashed its growth forecast for global oil demand this year by 54% to a million barrels a day from its outlook issued last summer.

Recent revisions to the outlook for world economic growth could prompt the IEA to cut its forecast further. Last week, the Organization for Economic Cooperation and Development forecast growth in its 30 member nations would slow to 1.8% this year and 1.7% next year from 2.7% last year.

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