The organisation appeared to be moving in that direction yesterday when Saudi Arabia, the world's biggest oil exporter, said the cartel could cut supplies by more than previously thought.The Saudi oil minister Ali al-Naimi said Opec could cut production by 1.5m barrels a day. "A cut of 1.5 million barrels per day is an easy option," he said. Referring to Opec concerns that non-Opec members, such as Russia, might take advantage of the move to grab market share, he added that "it would be nice" to see non-Opec members contribute with a cut of 500,000 barrels a day. The comments boosted the price of a barrel of Brent crude by 74 cents to $20.07.Opec oil ministers meet in Vienna next Wednesday and Opec's secretary-general, Ali Rodriguez, confirmed yesterday that the likely outcome was for a 1 to 1.5 million barrels per day reduction. Opec wants to push the price to a target level of $22 to $28 a barrel but economists say that may prove impossible.Oil broker Lawrence Eagles of GNI said: "The Saudi comments are definitely bullish in the short term but OPEC is fighting a powerful foe in the global economic slowdown."Matt Wickens, an economist at ABN Amro, said the "synchronised global slowdown" meant no economy was immune "Demand is collapsing and that will hit oil.".
The Bank of England's surprise half-point cut in interest rates is likely to be followed by a further reduction of the same magnitude, City pundits said yesterday. However, uncertainty over the timing of the Bank's next move risked depressing stock markets in the short term. The Bank of England's surprise half-point cut in interest rates is likely to be followed by a further reduction of the same magnitude, City pundits said yesterday. However, uncertainty over the timing of the Bank's next move risked depressing stock markets in the short term.Most City observers said it would be wrong to interpret yesterday's aggressive move, which took base rates to 4 per cent, as signifying that the Bank's Monetary Policy Committee believed the UK was heading for recession. Further cuts were nevertheless likely as the MPC, which meets monthly to set rates, appeared less worried about the risk of stoking inflation.The Bank said yesterday's cut was required if inflation was to meet the 2.5 per cent target imposed by the Treasury. "The global slowdown may be somewhat deeper and longer than previously thought. World inflationary pressures, including commodity prices, are weaker," it said "In the United Kingdom ...
cost and price pressures are somewhat more subdued."Steve Russell, UK equity strategist at HSBC, said: "This is the sort of rate cut that isn't all good news. The Bank's statement suggests it is more worried about the global outlook and less worried about inflationary pressures in the UK than it was before. But [the cut] clouds the issue about how much rates will fall. There's no reason why rates shouldn't fall by at least another 25 basis points as there's unlikely to be any hard data showing an [economic] improvement over the next month."Peter Saacke, a strategist at Merrill Lynch, said: "The evidence from all around the world has been so dreadful that there's scope for another 50 basis points cut from here."Philip Shaw, an economist at Investec Henderson Crosthwaite, said: "We'd expect a 0.25 per cent cut in December, with a further 0.25 per cent cut early next year."He added that the odds on the UK slipping into recession were no more than 25 per cent. "But news of more job losses will mean it'll feel like a recession," he added.Fund managers contented themselves that the Bank's move did not indicate possession of any yet to be disclosed worrying economic data. "The Bank is doing what everyone else is doing – looking at the overall background," said Andy Brough, a fund manager at Schroders.
