Oil drops after Opec maintains output

After beginning at 10 a.m., the meeting dragged on for at least six hours as the Organization of the Petroleum Exporting Countries grappled with how to respond to a prolonged slump in oil prices, which are down more than 60% from their highs in 2014.

This despite slowing growth in global oil demand, largely because of weaker economic output in China, the world’s biggest consumer of energy. The group is producing above its current ceiling, and the return of Indonesia to the cartel plus a ramp up of production in Iran is making it look even less meaningful. While that country’s production goes mostly for domestic consumption, the move could add to the total amount of OPEC barrels on sale.

Addressing delegates earlier, Kachikwu projected that demand for OPEC crude would rise by 1.2 million barrels per day to average 30.8 million barrels per day for the year 2016 leading to a more balanced market.

Iran Oil Minister Bijan Zangeneh said that the members at the meeting may stick with a policy of maintaining output unchecked, which is in line with market expectations.

Venezuela originally hoped to reduce OPEC output by 1.5 million barrels per day, according to the Financial Times.

“Prices have gone down too much”, said Vice Prime Minister Abdourhman Ataher Al-Ahirish of strife-torn Libya, where GDP is expected to shrink more than 6 percent this year.

A few days before the OPEC meeting on Friday, oil prices are once again showing some nervousness with Brent futures slipping and US crude losing the majority of Monday’s gains.

OPEC on Friday did not set a new oil output ceiling, with major oil producers reluctant to cut the supply. On Friday Brent was down 1.2 per cent to $US43.31near midday trading in NY.

NEW YORK – Oil prices fell on Friday after news that Organisation of the Petroleum Exporting Countries (Opec) was planning to maintain its production near record highs, despite depressed prices, as the producer group continued to seek share of an oversupplied market.

“The heavy pressure on non-OPEC producers, especially USA shale, is going to be kept up”, said Paul Horsnell, head of commodities research at Standard Chartered.

Saudi Arabia had hinted at cuts in output – but only if OPEC and non-OPEC members followed suit.

Following the decision, concerns about the supply glut, which have plagued the market and caused prices to fall since June past year, have increased. “According to analysts, OPEC countries which depend on oil revenues might face a hard endurance test in the event of a further decline of the oil price”.

OPEC has pumped more than its collective target of 30 million barrels a day the past 18 months, data compiled by Bloomberg show.