Oil prices lower as Opec keeps output quota unchanged

Oil prices lower as Opec keeps output quota unchanged

Singapore: Oil prices fell in Asia trade Thursday after Opec rebuffed pressure and left output unchanged, dealers said.

The market’s muted reaction to a sharper-than-expected drawdown in US crude stocks also reflected growing concerns that high prices may eventually take their toll on consumers, they said.

In early morning trade, New York’s main contract, light sweet crude for January delivery fell 79 cents to $86.70 a barrel from $87.49 in late US trades Wednesday.

Brent North Sea crude for January delivery dropped 49 cents to $88 a barrel.

“The subdued price reaction may be due to the markets pondering why OPEC rolled over ... concerns about economic and oil demand growth," said French banking giant Societe Generale.

The Organisation of the Petroleum Exporting Countries (Opec) decided at a meeting on Wednesday to maintain its daily production quota at 27.25 million barrels.

The US, the world’s biggest energy user, has earlier called on the cartel to pump more crude to cool oil prices which surged to record high levels of above $99 last month.

Opec, which supplies 40% of the world’s crude, has insisted it has no control over prices and that the market rally seen during much of the year does not reflect supply and demand fundamentals.

“The market is not controlled by supply and demand. It is totally ontrolled by speculators who consider oil as a financial asset," OPEC secretary general Abdalla al-Badri told a news conference in Abu Dhabi, where the cartel ministers decided to freeze output.

Opec also announced an extraordinary meeting for 1 February in Vienna, “given the need for extreme vigilance in assessing the market during the coming months". The cartel would still hold its scheduled 5 March meeting.

Meanwhile, the US Department of Energy (DoE) said Wednesday inventories of crude had plunged by 8.0 million barrels in the week ending 30 November, far higher than the consensus forecast of a drop of 1.25 million barrels.

The DoE said stockpiles of distillates, including heating fuel and diesel, were down 1.4 million barrels in the week, against market expectations for a fall of 300,000 barrels.