NEW YORK (Dow Jones Newswires), October 9, 2008

Right on cue, OPEC's price hawks are calling for an emergency meeting as the price of the group's reference basket of crudes hits $80 a barrel for the first time in a year.

The clamoring from Libya, Venezuela and others comes amid indications that even already deeply reduced expectations for global oil demand next year still may be too high, given the widening financial crisis.

Officially, the Organization of Petroleum Exporting Countries hasn't scheduled talks before the Dec. 17 session in Algeria, but talk was swirling Wednesday of a possible meeting Nov. 18 meeting.

An early OPEC session, coming after the U.S. Nov. 4 presidential election, would focus on the divisive issue within the group over what oil price level to defend by cutting oil output.

OPEC's price hawks would try to bring pressure to bear on Saudi Arabia, the world's biggest oil exporter, to lead an output cut and, effectively, a bailout of producers seeing prices slide from record highs.

The Saudis, the de facto OPEC leader, wouldn't welcome the spotlight. Prior to OPEC's September meeting, Saudi watchers said the kingdom favored letting prices drop from record highs near $150 a barrel to as low as $80 to give the global economy a boost.

As the price of global benchmark North Sea Brent crude fell below $100 early last month, OPEC pledged to adhere to previous output restraints. The move implied a steep Saudi cut from a unilateral increase in the summer directly ordered by the Saudi king, to curb soaring prices.

But the Saudis made it plain before leaving last month's OPEC talks they had no intention of aggressively cutting output and would continue the policy of meeting customer demand.

Deepening Crisis May Steel Saudis  

In the weeks following OPEC's talks, the U.S. banking crisis deepened and morphed into a worldwide crisis that stirred major central banks to take the extraordinary step of coordinating a cut in their target interest rates in an attempt to ease strains on the global financial system.

Given the crushing weight of the crisis on global economies, the Saudis may be even less likely now to want to prop up oil prices.

Analysts said OPEC price hawks such as Venezuela and Iran start to have budget difficulties with oil prices below $90 a barrel.

Renewed pressure on oil prices, from a global credit crunch, comes as demand is falling sharply, but may still be overestimated.

Oil demand in the U.S., the world's largest oil consumer, fell 124,000 barrels a day to 18.341 million barrels a day in the week ended Oct. 3, according to data released Wednesday by the Energy Information Administration. That's the lowest demand level since Sept. 21, 2001, in the wake of the 9/11 attacks on the U.S. The demand drop was a massive 11.8%, or 2.45 million barrels a day, from a year earlier.

In the last four weeks, a period covering two major hurricanes that hit the Gulf Coast region, demand was 18.66 million barrels a day, the lowest for any four weeks since June 4, 1999, and a fall of nearly 1.8 million barrels a day, or 8.6% from a year ago.

Year-to-date U.S. oil demand is down 4.9%, or more than 1 million barrels a day below a year ago, at 19.69 million barrels a day.

EIA on Tuesday tripled the size of the projected drop-off in U.S. oil demand for the current quarter, and said it expects a full-year 2008 decline of 830,000 barrels a day, the biggest fall since 1981.

Following 2008 oil demand of 19.85 million barrels a day, the lowest since 2002, the U.S. appetite for oil is expected to dip further in 2009, to the weakest rate since 1991.    

Revisions Need Further Revisions  

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