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OPEC to Cut Oil Production Quotas

The price of oil passed $63 a barrel on Friday, after the news on smaller American oil reserves and OPEC`s plans to reduce oil production quotas by half a million barrels a day, affective as of February, was made public. The price of a barrel of crude oil increased by 92 cents and reached $63.43 a barrel in New York`s commodity exchange, Friday. A day earlier, the price of oil jumped $1.14 per barrel, after OPEC`s announcement of its plans. From Wednesday to Friday, the price of a barrel of crude oil rose 4%.

Ali Naimi, Saudi Arabia`s Oil Minister, said that the decision to cut oil production quotas was a result of instability in the petroleum market. The decision to cut quotas, he said, was an attempt to stabilize the market. The US government announced Wednesday that its reserves of crude oil, heating oil and fuel have diminished, although crude oil reserves are still substantially higher than they were last year, heating oil and fuel levels are lower than they were last year.

Other forces affecting the price of oil have played a contributing factor in setting the current price of oil. News of renewed attacks in Nigeria, the world`s 8th largest exported of oil and the United States 5th largest supplier of oil, have raised fear that Nigerian oil supply may be affected. The reports indicated that armed men have taken control of a Royal Dutch Shell facility, abducted several hostages, shot a man and stopped the oil producing giants work in the region.