Oil prices dip as doubt seeps into market on OPEC

M – Fasten your seat belts, gas prices could be in for a bumpy ride. On Wednesday, the expired January Brent contract ended up 8.8 percent at $50.47.

During the Vienna meeting held Nov.30, OPEC members chose to implement a new OPEC-14 production target of 32.5 million barrels per day.

US refined products also rose along with crude – ultra low sulfur diesel (ULSD) futures soared as much as 5.5 percent to its highest in more than a year while gasoline futures jumped as much as 6 percent.

A drop in crude oil prices that marked an end to the OPEC honeymoon was saved in part by USA data showing steady labor gains, though wages remained soft.

The Organization of the Petroleum Exporting Countries will meet in Vienna on Wednesday aiming to implement a deal outlined in September to cut output by around 1 million barrels per day (bpd), from around 33.82 million bpd in October. Countries such as Russia, Saudi Arabia, Iran and Venezuela depend heavily on oil revenue to fund their governments and sustain their economies. Drilling fell off after oil prices started to slide in mid-2014.

Analysts said soaring oil prices in the next three to five years would be unlikely considering the current demand and supply situation in the oil market. “Ironically, it’s USA shale production that is breaking down OPEC and Russian Federation”.

Continental Resources Inc., Devon Energy Corp., Panhandle Oil and Gas Inc., Helmerich & Payne Inc., Unit Corp. and WPX Inc. all hit 52-week highs early Thursday, although some of those stocks closed down for the day. “The balance will be reached – and (we) could restart again”.

Much of that production is expected to come from the Permian Basin in Texas, where prices for acquiring oilfield acreage have skyrocketed in recent months. The national average for gasoline on Thursday stood at $2.16 a gallon, according to the AAA auto club. That follows economic data that show gross domestic product increased more than 3 percent in the third quarter.

OPEC members are shooting for higher oil prices.

Compared with a year ago, though, diesel was 2 cents cheaper but regular was 11 cents higher, and premium 13 cents higher. That means the price of imported oil will rise further for China, India and other economies around the Asia Pacific-especially emerging economies-which have seen the biggest declines against the dollar. “This should be a wake-up call for sceptics who have argued the death of OPEC”, Amrita Sen, chief oil analyst at Energy Aspects Ltd., told Bloomberg. The average loss was 1.38 percent. State-controlled Rosneft PJSC, the country’s largest producer, is likely to bear most of the burden, according to Renaissance Capital.