OPEC keeps production at current level

But their options are limited.

Benchmark Brent oil futures are below $45 per barrel, just a few dollars off their 6-year lows, and OPEC’s own basket of crude grades is below $38 per barrel – a fraction of what most OPEC members need to balance their budget.

Opec members failed to agree an oil production ceiling on Friday at a meeting that ended in acrimony, after Iran said it would not consider any production curbs until it restored output scaled back for years under western sanctions. But some members already are selling at a loss and doing so now cutting would further hurt them financially.

Internationally traded Brent was down 47 cents, or 1.1 percent, at $43.37 at 11:44 a.m. EDT (1644 GMT), having fallen earlier this week to a low of $42.43, within cents of August’s 6½-year trough.

Indonesia, which rejoined Opec after leaving seven years ago, said it would increase crude production. At the OPEC meeting to be held on Friday at Vienna, a positive decision is expected relating to the production cuts and hence the price rise. He said he hopes the extra output will be accommodated within OPEC’s formal ceiling of 30 million barrels a day.

“While oil advanced for the second day ahead of the OPEC meeting, there is really nothing much to cheer about”, said Bernard Aw, market strategist at IG Markets in Singapore.

Historically low oil prices have OPEC so divided that marathon talks in Vienna that closed Friday could only produce one thing: disagreement.

Concerns about the pace of growth in China and the weak trajectory in the European economy have helped push crude oil markets toward the supply side as recovery is not enough to sop up the excess oil in production.

He rejected claims that OPEC was now divided over policy going forward with some members openly calling for a cut in production in the wake of tumbling oil prices since June 2014.

Oil prices rose Thursday as traders hedged their bets in case OPEC surprises the market.

Wood Mackenzie estimated in January that oil at $40 per barrel would leave 1.5 million bpd unprofitable to produce, but this has not led to a significant cut in output outside of OPEC.

“By then they have a better feel for Iranian production; how much damage has been done to shale production; and how many offshore and oil sands projects have been delayed or scrapped”, Williams said. Still, the move wasn’t entirely unexpected, and Friday’s 2.4 percent drop in USA crude prices may soon abate, analysts said.