Oil Set for Rebound as Record Drop Spurs OPEC Production Cuts

Dec. 30 (Bloomberg) -- Oil futures may rebound from their worst year to average $60 a barrel next year as OPEC makes record production cuts to counter the deepest economic slump since World War II.

The forecast, the median of 33 analysts compiled by Bloomberg, represents a 50 percent gain from yesterday’s $40.02. A 14 percent reduction in supply, equal to 4.2 million barrels a day, pledged by the Organization of Petroleum Exporting Countries will erode U.S. crude inventories that rose 10 percent this year as the slowing economy reduced world demand for the first time since 1983.

“Once we get through the crisis, we will find that support is higher than $40 a barrel,” said Sarah Emerson, managing director of Energy Security Analysis Inc. in Wakefield, Massachusetts. “The decline in demand has already occurred. A lot of analysts were late coming to realize that. By next summer this market should be turning around.”