Opec members have no choice but to implement agreed output cuts and inform customers of the reduction if they want a stable oil price between $70-$90 a barrels, says the Opec President.

Saudi Arabia has already made substantial cuts in crude supplies and helped the market recoup earlier losses. Saudi Arabia, the world’s biggest oil exporter, has reduced exports by around 900,000 barrels per day from a peak in August.

Saudi Arabia’s supply cut eases doubts about whether the world’s top exporter would comply quickly with a 1.5 million barrel per day output cut agreed by the Organisation of the Petroleum Exporting Countries in Vienna last month.

Other Opec members have also cut back. The United Arab Emirates has reduced its production to around 2.3 million barrels per day (bpd) from around 2.5 million bpd, a top state oil company official said on November 4.

Algeria is reducing its oil output by 71,000 bpd in line with Opec’s supply cut decision, the Algerian official news agency APS said on November 4, quoting the country’s Energy and Mining Ministry.

Qatar has cut exports to Asia by about 40,000 barrels per day from this month, Energy Minister Abdullah al-Attiyah told Reuters.

Crude oil has plummeted from a record above $147 a barrel in July as the credit crisis in the global banking sector has started to hit the wider economy. This has already dampened fuel consumption in the United States, the world’s top oil consumer, and other major consumer nations.

US auto sales plunged 32 per cent in October to lows unseen in a quarter century, while US factory activity — a barometer for future oil demand — fell to its lowest in 26 years.

Oil prices will rebound to more than $100 a barrel as soon as the world economy recovers, and will exceed $200 by 2030, the Financial Times said on November 5 quoting International Energy Agency report due next week.

The developed world’s energy watchdog has doubled its long-term prices expectation from last year’s $108 a barrel for 2030 and assumes oil prices will rebound from today’s $60-$70 a barrel to trade, in real terms adjusted by inflation, at an average of more than $100 a barrel from 2008 to 2015.

Output from the world’s oil fields is declining at a natural rate of 9 per cent, the IEA found, following the most comprehensive review of its kind. This decline rate is curtailed to 6.7 per cent when current investments to boost production are made.

Copper

Copper which had risen towards the end of October, reversed earlier gains and on November 3 fell as much as 3.5 per cent after a sharp jump in inventories fanned pessimism about Chinese demand.

Copper stocks on the London Metal Exchange grew 7,275 tonnes to 237,925 the highest level since March 2004. The increase followed gains of 6,775 and 6,575 at the end of previous week.

A measure of Chinese manufacturing activity showed factory output shrank sharply in October in the face of waning orders, while officials pledged further steps to boost domestic demand to keep the economy from slowing too much.

Three-month copper on the LME fell as low as $3,954 a tonne, reversing an earlier high of $4,270.

Prices for the metal, used in construction and power, have fallen more than 50 per cent since reaching a record high of 38,940 a tonne in July.

Last month, LME copper fell nearly 36 per cent, its biggest drop since at least 1970 and possibly in the exchange’s 130-year history of copper trading. Nickel dropped 24 per cent, its second biggest fall on record.

Base metal prices had started this month stronger, buoyed by a weaker dollar and rising equity markets, although European shares turned negative in mid-morning trade.

Rubber

The world’s top three rubber producing countries recently agreed to cut output by three per cent next year in a bid to shore up prices hit by dwindling demand and growing fears of a global recession.

But the move by Thailand, Indonesia and Malaysia to jointly cut production by 215,000 tonnes is unlikely to bolster rubber prices, which have nearly halved since hitting a 28-year peak in June as a widespread credit crisis threatens to curb demand.

The three countries, which account for 70 per cent of global output, planned to cut down and replant up to 160,000 hectares of rubber next year to trim supply in the near term.

As the world tilts towards recession and markets struggle to stay afloat amid a widening credit crisis, commodities have suffered heavy losses, with palm down 65 per cent since March and Tokyo rubber futures losing more than half of their value since hitting a 28-year peak this year.

Rubber exporters from Thailand, Indonesia and Malaysia could have easily lost more than $20 million after Chinese buyers defaulted on around 10,000 tonnes as prices dropped below $2,000 a tonne.