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 The Organization of the Petroleum Exporting Countries (OPEC) ended
its policy meeting on Friday without agreeing to lower production.
For the first time in decades, oil ministers dropped any reference
to the group's output ceiling, highlighting disagreement among
members about how to accommodate Iranian barrels once Western
sanctions are lifted.
"A stronger dollar and the aftershock of Friday's OPEC meeting are
weighing on the oil market," said Tamas Varga, oil analyst at
brokerage PVM Oil Associates in London.
Brent crude prices, the globally traded benchmark, were down 53
cents at $42.47 a barrel at 1217 GMT, close to their 2015 trough of
$42.23 and nearing more than six-year lows. U.S. crude was trading
at $39.14 a barrel, down 83 cents.
The dollar was up against a basket of currencies.
Analysts at Barclays said the lack of an OPEC production target in
its written announcement was a sign of discord.
"Past communiques have at least included statements to adhere,
strictly adhere, or maintain output in line with the production
target. This one glaringly did not," they said.
OPEC's output of more than 30 million barrels per day (bpd) has
compounded an oil glut, pushing production 0.5 million to 2 million
bpd beyond demand and putting many producers under pressure,
especially small-sized U.S. shale drillers that have piled up large
amounts of debt.
Analysts at Commerzbank said any recovery in oil prices would be
dictated not by OPEC but by rising demand and a fall in production
outside of the group.
"Rising oil prices next year will not depend on OPEC reaching
immediate agreement or on a return to price control, as we expect
prices to increase primarily on the back of continued robust demand
growth and a decline in non-OPEC oil production," they said in a
report.
Saudi Arabia, the world's biggest oil exporter, is banking on
producers of unconventional oil buckling in order for output to
fall.
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Saudi Aramco Chief Executive Amin Nasser said at a conference in
Doha on Monday he hoped to see oil prices adjust at the beginning of
next year as unconventional oil supplies start to decline.
In a sign that U.S. production could dip, Baker Hughes' November
data showed U.S. rig count numbers were down by 31 month-on-month to
760 rigs.
Others disagreed. Patrick Pouyanne, CEO of French oil company Total,
said at the same event he did not expect prices to recover next year
as production growth was set to outstrip a rise in demand.
"It is not unreasonable to assume that downward pressure on prices
will remain for the foreseeable future, as it will take time for low
prices to materially scale back production," said analysts at Cenkos
Securities.
In a sign investors expect prices to remain weak over years to come,
WTI forward contracts out to 2024 have dropped below $60 a barrel.
(Additional reporting by Henning Gloystein in Singapore; editing by
David Clarke and William Hardy)
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