Oil prices in New York gained Thursday after OPEC held its production ceiling unchanged and analysts saw poor US economic data pointing to new stimulus measures from the Federal Reserve. (AFP Photo/Fred Tanneau)
Oil prices in New York gained Thursday after OPEC held its production ceiling unchanged and analysts saw poor US economic data pointing to new stimulus measures from the Federal Reserve.
Algerian Energy and Mines Minister Youcef Yousfi said the 12-nation Organization of Petroleum Exporting Countries, which pumps a third of the world’s oil, decided in Vienna to keep its current output cap at 30 million barrels per day (bpd) as it has been since December’s meeting.
Oil prices had been mixed ahead of the cartel’s meeting.
But during and after the meeting the main US contract, West Texas Intermediate crude for July delivery, surged to end at $83.91 a barrel, up $1.29 from Wednesday.
In London, Brent crude for January was little changed, losing 10 cents to $97.03.
JPMorgan Chase said the OPEC result was not surprising, even though there had been pressure to cut production in the face of prices that have fallen more than $20 a barrel in recent months.
The bank’s commodities researchers said that the tenor of reports before the meeting was that the members thought the existing ceiling needed to be honored more by the members, some of whom had been overproducing.
“The brunt of the readjustment process, should one be taken, falls on Kuwait, the United Arab Emirates, and, in particular, Saudi Arabia — the countries which have increased production over the course of the last 18 months to fill the gap from the loss of Libyan supply last year,” JPMorgan said.
“We do not assign a high probability that the 30 mbd target will be strictly adhered to, but rather that the Gulf trio will continue the challenging task of balancing the world oil markets by keeping production at some level above that target.”
The US price got a boost also on speculation that weak US data on jobs and consumption could open the way for more stimulus from the Federal Reserve’s policy board next week.
“With the US figures this morning, we expect that a stimulus may be announced during the FOMC meeting Wednesday,” said Bart Malek of TD Securities. –AFP