Oil sinks as OPEC decides to not cut output
NEW YORK: Oil prices sank on Friday as the OPEC cartel decided not to cut output despite the global oversupply that is battering the market.
The 13-member Organization of the Petroleum Exporting Countries, which pumps about 40 percent of the world’s crude oil, took no action to shore up the market and observers said it appeared to be in disarray after meeting in Vienna.
The hands-off decision pushed US oil back below $40 a barrel, after closing at the level Wednesday for the first time since August.
US benchmark West Texas Intermediate tumbled $1.11, or 2.7 percent, to $39.97 a barrel on the New York Mercantile Exchange.
Brent North Sea crude for January delivery, the international benchmark for oil, fell to $43.00 a barrel in London, down 84 cents (1.9 percent) from Thursday’s settlement.
“The market did not take the announcement out of OPEC very well today as OPEC appears to really be in disarray among its members and they took the path of least resistance, which was to do nothing and wait to see if things get better,” said Andy Lipow of Lipow Oil Associates.
With OPEC countries producing an estimated 32 million barrels per day, above the group’s agreed 30 million barrel target, and with Iran expected to resume substantial exports next year, hopes were that the group would take steps to lower supplies.