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Author Topic: Nymex Crude Ends at One-Month Low as OPEC Keeps Output Steady  (Read 727 times)

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Oil futures settled at a one-month low Friday after the Organization of the Petroleum Exporting Countries agreed to keep output steady and stock markets fell.

Light, sweet crude for July delivery settled $1.64, or 1.8%, lower at $91.97 a barrel on the New York Mercantile Exchange, the lowest finish for a front-month contract since May 1. Brent crude on ICE Futures Europe settled $1.80, or 1.8%, lower at $100.39 a barrel.

Futures began the session in negative territory and remained lower after OPEC agreed to keep its production ceiling at 30 million barrels a day, a decision that had been widely forecast among oil-market observers.

"This is what I predicted--that they would keep everything the same," said Mark Waggoner, president of Excel Futures, a commodities broker in Bend, Ore. "OPEC is saying that we're well supplied, and we are."

Although OPEC includes the world's largest and most important exporters of oil, its influence has diminished in increasing years as U.S. oil output has surged.

The group said in an official statement that members would "if required, take steps to ensure market balance and reasonable price levels for producers and consumers, and Member countries reiterated their readiness to rapidly respond to developments that might place oil market stability in jeopardy."

Although OPEC made no mention of U.S. oil production in its official communique, a senior Gulf OPEC delegate told Dow Jones Newswires that the group has agreed to study the impact of growing U.S. shale oil production on its members. Booming U.S. output has reduced U.S. imports and undermined smaller members that produce large volumes of sweet shale-quality crude.

"Algeria, Iran, Venezuela and to some extent Nigeria were quite worried in the meeting about growing shale oil supplies," said the delegate.

OPEC's decision comes even as oil prices have declined this year. Brent crude, the global benchmark, is down almost 10% this year, weighed down by ample supply and weak demand in the U.S., Europe and China.

Crude futures Friday also were weighed down by sinking equity markets. Crude prices often track stocks, as traders view the blue-chip indexes as a barometer of broader U.S. economic health. The Standard & Poor's 500 index recently fell 0.6% to 1645.31.

Falling oil prices could provide OPEC the impetus for an output cut at its next meeting, scheduled for Dec. 4, some analysts say. "All signs continue to suggest that the global economy is still slowing and oil demand is not going to go through a growth spurt anytime soon," said Dominick Chirichella, analyst at the Energy Management Institute in New York.

Front-month June reformulated gasoline blendstock, or RBOB, settled 3.36 cents, or 1.2%, lower at $2.7789 a gallon. June heating oil settled down 5.10 cents, or 1.8%, at $2.7921 a gallon. Both contracts expired at the close of trading Friday.

Source:   Rigzone


Adewale Odubiyi
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Nigeria Oil & Gas Forum


 

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