Opec cut 'being laughed at'

28/10/2008

Investors are laughing at the Organisation of the Petroleum Exporting Countries' (Opec) supply cut announced last week as indicators point to tumbling demand.

Such is the claim of Jonathan Kornafel, a director for Asia at options traders Hudson Capital Energy in Singapore, who explained that it is likely that they will reduce supply further in December.

"Everyone is getting out of the market, so there is no attention being paid to long-term fundamentals," he told Bloomberg.

Meanwhile, the Energy Department is expected to deliver a report showing that reserves of crude, gasoline and distillate fuel - which includes heating oil and DERV - rose last week, indicating that demand is falling further in the US.

Ahead of the report, oil prices have continued to fall, with Opec announcing yesterday that its basket price for this week has fallen below $60 (£38) a barrel.

Falls in the price of oil may well impact on the price of a range of derivatives including heating oil, red diesel, DERV and bunker fuel.