At an emergency OPEC meeting on Friday, the organization quickly reached an agreement to cut production by 1.5 million barrels per day (bpd) in an effort to halt a deep oil price slide.
International benchmark U.S. crude has slumped by close to 60% from a record high of $147.27 hit in July. On Friday, it fell again to below $63 a barrel before recovering slightly.
"The decision was straightforward," Saudi Oil Minister Ali al-Naimi said after the meeting. "OPEC will do whatever is necessary to balance oil markets."
In the world's biggest energy consumer the United States, oil prices and economic weakness have been major factors in the run-up to the November presidential election. Washington was quick to criticize OPEC's decision.
"It has always been our view that the value of commodities, including oil, should be determined in open, competitive markets and not by these kinds of anti-market production decisions," White House spokesman Tony Fratto said.
For OPEC, the speed of the oil market's collapse after a record rally has stirred memories of the Asian financial crisis in the late 1990s. OPEC's sluggish response then as demand disappeared and oil stocks mounted up helped to push oil to less than $10 in 1998.
"OPEC is showing it is not going to make that mistake again," said David Kirsch, a manager at Washington-based PFC Energy.
Before the roughly two hours of talks, ministers had agreed about the need to reduce production, but differed over the extent of a cut.
Saudi Arabia and other core Gulf producers have relatively low price requirements and are nervous about further destruction of demand in consumer countries as the world economy slows. They had favored a relatively modest reduction of around a million bpd, delegates said.
Iran and others are more dependent on higher oil revenues and was among those who had pushed for a deeper cut of around 2 million bpd. The extent of the market's collapse focused minds and the two sides soon met in the middle.
"The message to the market is, first, of the strength and unity of OPEC in terms of its decisions. There was no dispute or fight, here we were all in agreement," said Venezuela's Energy and Petroleum Minister Rafael Ramirez in an interview with Venezuelan state television.
OPEC's President Chakib Khelil of Algeria said the only option for member countries was to respect the new agreement. "They don't have a choice. What choice do they have? See the oil price go down to lower levels? They'll make the cuts," he said. He also said OPEC would take further action if necessary before the next scheduled meeting in December in Oran, Algeria.
Under Friday's agreement, the 1.5 million bpd being removed from the September production ceiling of 28.8 million bpd includes 466,000 bpd less from top exporter Saudi Arabia and 199,000 bpd from Iran, the second biggest exporter, OPEC said in a communique.
Although the group said at its September meeting it would strictly adhere to targets, it is still pumping above its collective ceiling.
Khelil said the total removed from the market by the end of the year would be closer to 1.8 million bpd as overproduction was eliminated.
Saudi Arabia, the only OPEC member to be pumping significantly above target, has already reduced supplies slightly. It unilaterally increased its production when prices were racing to their July record.
Existing Homes Sales Rise
Sales of existing homes rose by the largest amount in more than five years in September. But analysts cautioned against reading too much into the gain, noting that it reflected conditions before the latest upheaval in financial markets increased the likelihood of a recession in the overall economy.
The National Association of Realtors reported that sales of existing homes rose by 5.5% from August to September to a seasonally adjusted annual rate of 5.18 million units -- far better than the flat results analysts had expected. On an unadjusted basis, sales were up 7.8% from September last year.
But even with the gain in sales, prices kept falling. The median sales price has dropped to $191,600, down by 9% from a year ago.
The National Association of Realtors estimated that 35-40% of sales currently are distressed sales -- either foreclosed homes or short sales in which the owner is selling the house for less than the value of the mortgage.
Distressed sales are having a big impact in lowering prices in some formerly red-hot sales markets in such regions as the West, where sales prices fell in September by 18.5% from a year ago.
Lawrence Yun, chief economist for the Realtors, said there were some glimmers of hope that the bottom of the housing slump may be near. He said that a sales turnaround first seen in California was beginning to broaden to other regions of the country including Colorado, Kansas, Minnesota, Missouri and Rhode Island.
And the number of unsold existing homes on the market dropped by 1.6% in September to 4.27 million units. That marked the second month in a row inventories have dipped, but the level still represented a 9.9-month supply -- about double what's normal.
Other economists, including former Federal Reserve Chairman Alan Greenspan, are expressing concerns that the financial market turmoil will further weaken housing activity and prolong the current slump.
Greenspan told Congress on Thursday that the country had been hit by a "once-in-a-century credit tsunami." He said he did not expect the overall economy to make a sustained rebound until housing, where the economic troubles began, stabilized. He said that was still many months away.
Congress on Oct. 3 passed a $700 billion rescue package for the financial system. Shelia Bair, the head of the Federal Deposit Insurance Corp., is pushing Treasury to include in that package a new program to prevent more mortgage foreclosures as a way to provide further support for housing.
Under Bair's proposal, the government would provide guarantees for mortgages that have been reworked by banks to lower the payment schedules to more affordable levels.
By region of the country, sales in the West soared by 43%, on an unadjusted basis, from September last year, and rose a more moderate 5% in the Midwest. In the South, sales dipped 1.2% and in the Northeast they slipped 1.4%.
Traders Relieved
If ever a 300-point loss on Wall Street could be a good thing, it was Friday. Wall Street started the day with a nervous eye on how far stocks would have to fall before triggering emergency trading halts. They ended the session relieved, even though the Dow Jones industrial average closed down 312, or 3.6%, its lowest finish since the financial crisis began six weeks ago.
The morning started with Dow futures -- a bet, before trading opens, on where stocks would go -- had plunged 550 points Friday morning, triggering a temporary trading halt. This left the traders with many questions and no answers.
As the market opened extraordinarily orderly, the market dropped 503 points before moving higher throughout the day. In the last hour of trading, the Dow got within about 100 points of being positive, but the market slid south. In the last six weeks, the Dow has experienced triple-digit moves in 27 of 30 trading sessions.
The Federal Reserve Open Market Committee, which sets the Fed's target short-term interest rates, meets Tuesday and Wednesday. Most investors are expecting further rate cuts beyond the current 1.5%, which is already near historic lows.
Sources: Reuters, Yahoo
International benchmark U.S. crude has slumped by close to 60% from a record high of $147.27 hit in July. On Friday, it fell again to below $63 a barrel before recovering slightly.
"The decision was straightforward," Saudi Oil Minister Ali al-Naimi said after the meeting. "OPEC will do whatever is necessary to balance oil markets."
In the world's biggest energy consumer the United States, oil prices and economic weakness have been major factors in the run-up to the November presidential election. Washington was quick to criticize OPEC's decision.
"It has always been our view that the value of commodities, including oil, should be determined in open, competitive markets and not by these kinds of anti-market production decisions," White House spokesman Tony Fratto said.
For OPEC, the speed of the oil market's collapse after a record rally has stirred memories of the Asian financial crisis in the late 1990s. OPEC's sluggish response then as demand disappeared and oil stocks mounted up helped to push oil to less than $10 in 1998.
"OPEC is showing it is not going to make that mistake again," said David Kirsch, a manager at Washington-based PFC Energy.
Before the roughly two hours of talks, ministers had agreed about the need to reduce production, but differed over the extent of a cut.
Saudi Arabia and other core Gulf producers have relatively low price requirements and are nervous about further destruction of demand in consumer countries as the world economy slows. They had favored a relatively modest reduction of around a million bpd, delegates said.
Iran and others are more dependent on higher oil revenues and was among those who had pushed for a deeper cut of around 2 million bpd. The extent of the market's collapse focused minds and the two sides soon met in the middle.
"The message to the market is, first, of the strength and unity of OPEC in terms of its decisions. There was no dispute or fight, here we were all in agreement," said Venezuela's Energy and Petroleum Minister Rafael Ramirez in an interview with Venezuelan state television.
OPEC's President Chakib Khelil of Algeria said the only option for member countries was to respect the new agreement. "They don't have a choice. What choice do they have? See the oil price go down to lower levels? They'll make the cuts," he said. He also said OPEC would take further action if necessary before the next scheduled meeting in December in Oran, Algeria.
Under Friday's agreement, the 1.5 million bpd being removed from the September production ceiling of 28.8 million bpd includes 466,000 bpd less from top exporter Saudi Arabia and 199,000 bpd from Iran, the second biggest exporter, OPEC said in a communique.
Although the group said at its September meeting it would strictly adhere to targets, it is still pumping above its collective ceiling.
Khelil said the total removed from the market by the end of the year would be closer to 1.8 million bpd as overproduction was eliminated.
Saudi Arabia, the only OPEC member to be pumping significantly above target, has already reduced supplies slightly. It unilaterally increased its production when prices were racing to their July record.
Existing Homes Sales Rise
Sales of existing homes rose by the largest amount in more than five years in September. But analysts cautioned against reading too much into the gain, noting that it reflected conditions before the latest upheaval in financial markets increased the likelihood of a recession in the overall economy.
The National Association of Realtors reported that sales of existing homes rose by 5.5% from August to September to a seasonally adjusted annual rate of 5.18 million units -- far better than the flat results analysts had expected. On an unadjusted basis, sales were up 7.8% from September last year.
But even with the gain in sales, prices kept falling. The median sales price has dropped to $191,600, down by 9% from a year ago.
The National Association of Realtors estimated that 35-40% of sales currently are distressed sales -- either foreclosed homes or short sales in which the owner is selling the house for less than the value of the mortgage.
Distressed sales are having a big impact in lowering prices in some formerly red-hot sales markets in such regions as the West, where sales prices fell in September by 18.5% from a year ago.
Lawrence Yun, chief economist for the Realtors, said there were some glimmers of hope that the bottom of the housing slump may be near. He said that a sales turnaround first seen in California was beginning to broaden to other regions of the country including Colorado, Kansas, Minnesota, Missouri and Rhode Island.
And the number of unsold existing homes on the market dropped by 1.6% in September to 4.27 million units. That marked the second month in a row inventories have dipped, but the level still represented a 9.9-month supply -- about double what's normal.
Other economists, including former Federal Reserve Chairman Alan Greenspan, are expressing concerns that the financial market turmoil will further weaken housing activity and prolong the current slump.
Greenspan told Congress on Thursday that the country had been hit by a "once-in-a-century credit tsunami." He said he did not expect the overall economy to make a sustained rebound until housing, where the economic troubles began, stabilized. He said that was still many months away.
Congress on Oct. 3 passed a $700 billion rescue package for the financial system. Shelia Bair, the head of the Federal Deposit Insurance Corp., is pushing Treasury to include in that package a new program to prevent more mortgage foreclosures as a way to provide further support for housing.
Under Bair's proposal, the government would provide guarantees for mortgages that have been reworked by banks to lower the payment schedules to more affordable levels.
By region of the country, sales in the West soared by 43%, on an unadjusted basis, from September last year, and rose a more moderate 5% in the Midwest. In the South, sales dipped 1.2% and in the Northeast they slipped 1.4%.
Traders Relieved
If ever a 300-point loss on Wall Street could be a good thing, it was Friday. Wall Street started the day with a nervous eye on how far stocks would have to fall before triggering emergency trading halts. They ended the session relieved, even though the Dow Jones industrial average closed down 312, or 3.6%, its lowest finish since the financial crisis began six weeks ago.
The morning started with Dow futures -- a bet, before trading opens, on where stocks would go -- had plunged 550 points Friday morning, triggering a temporary trading halt. This left the traders with many questions and no answers.
As the market opened extraordinarily orderly, the market dropped 503 points before moving higher throughout the day. In the last hour of trading, the Dow got within about 100 points of being positive, but the market slid south. In the last six weeks, the Dow has experienced triple-digit moves in 27 of 30 trading sessions.
The Federal Reserve Open Market Committee, which sets the Fed's target short-term interest rates, meets Tuesday and Wednesday. Most investors are expecting further rate cuts beyond the current 1.5%, which is already near historic lows.
Sources: Reuters, Yahoo
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