A year ago, Riyadh spearheaded a decision to maintain output and fight for market share rather than cut production to sustain high oil prices.
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On the New York Mercantile Exchange, WTI crude for January delivery traded between $39.61 and $41.98 a barrel before settling at $39.98, down 1.08 or 2.64% on the session.
US crude CLc1 was trading up 9 cents at $41.17 per barrel at 0706 GMT (2.06 a.m. ET), while internationally traded Brent LCOc1 was down 7 cents at $43.77.
“What OPEC have on their side is the market is in quite a bearish mode, so there are quite a few shorts out there… if we see anything that resembles a move towards stabilizing the price, then we could see (oil) move 20 or 25 percent higher within a very short period of time” he said.
As the meeting was underway it appeared that OPEC would raise its current 30 million barrels per day cap on production, but negotiations broke down after Iran said it would not accept any limits until it emerges from Western-imposed sanctions.
But, breaking from recent practice, it published no figures on output in its post-meeting statement, and put off a production reassessment to its next meeting on Jun 2, 2016.
Dr. Kachikwu who is also head of Nigeria’s delegation to the 168th Ordinary OPEC Meeting made this assertion while addressing the OPEC Ministers Conference in Austria, Vienna. Some OPEC members, including the United Arab Emirates, have acknowledged that their economies need to diversify and wean themselves from an oil-rich diet.
Naimi said he hoped growing global demand could absorb an expected jump in Iranian production next year. Opec has pumped more than its collective target of 30mn barrels a day for the past 18 months, data compiled by Bloomberg show.
Dr. Kachikwu maintained that OPEC remains committed to do its part in protecting the environment and supporting sustainable development adding that OPEC and its member countries are taking part in the climate change negotiations in Paris with the goal of full, effective and sustained implementation of the United Nations Framework Convention on Climate Change. A stronger U.S. currency weighs on dollar-priced commodities, including oil, by making them more expensive for buyers using foreign currencies.
The non-OPEC group of countries taken as a whole are expected to see their production fall by 600,000 bpd in 2016 and in combination with an increase of 1.2m bpd for global oil demand this will provide scope for Opec to increase production in combination with a fall in the bulging stocks of oil.
Despite many member countries plan to lower the production ceiling, Saudi Arabia has demanded reduction in Russia’s production as a prerequisite for decreasing its production, a request which Russian Federation would not concur with.
Failure to reduce the global oversupply could push oil prices $20 lower next year, Venezuelan Oil Minister Eulogio Del Pino warned before the OPEC meeting.
OPEC confirmed that Indonesia had returned to the cartel after a near seven-year absence, bringing the number of member countries to 13.
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The dollar has posed an additional headwind for oil prices, with the WSJ Dollar Index up about 8% on the year.
