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OPEC ministers are meeting in Vienna today for a pivotal decision on whether to slash oil production, faced with a glut that has sent prices plunging by over 30 per cent in five months.
The 12-nation cartel is under pressure from its poorer members like Venezuela and Ecuador to cut output as collapsing prices have slashed their precious revenues.
But its powerful Gulf members have rejected calls to turn down the taps unless they are guaranteed market share in the highly competitive arena, particular in the United States, where a flood of oil being extracted domestically from shale rock has in part caused the global oversupply.
The price of US benchmark oil fell to a new four-year low today on growing expectations that the Organization of Petroleum Exporting Countries (OPEC) will not take significant action in Vienna, home to the cartel that pumps out about a third of the world’s crude.
West Texas Intermediate for delivery in January fell to $72.61 a barrel – the lowest level since 2010. It later stood at $72.79 at about 0830 GMT, down 90 cents from yesterday’s closing level.
Crude prices have been depressed also by a strong dollar and worries about stalling energy demand in a weak global economy.
The International Energy Agency had warned in a report issued mid-November that the “price rout” was not over, and that prices will keep sliding well into 2015.
OPEC kingpin Saudi Arabia on Wednesday said Gulf nations had reached a consensus over what needed to happen regarding the cartel’s level of supply, adding that it hoped the other members would agree.
“I am confident that OPEC is capable of taking a very unified position,” Saudi Oil Minister Ali al-Naimi told reporters.
OPEC pumped 30.6 million oil barrels per day last month, above its 30 million bpd target according to the International Energy Agency, which advises countries on energy policy.
Some analysts believe that the cartel will agree to trim such excess rather than cut its official ceiling.
“Traders are sceptical that the cartel’s current production ceiling of 30 million barrels of oil per day will be reduced at this meeting,” said Fawad Razaqzada, an analyst at Forex.com
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