Oil prices plummet as OPEC decides against output cut
Kim Hjelmgaard, USA TODAY 11:05 a.m. EST November 27, 2014
USA TODAY's Kim Hjelmgaard reports from the OPEC Summit in Vienna. Oil prices fell sharply Thursday amid expectations the powerful oil collective OPEC will decide against intervening in global markets by cutting production levels. VPC
VIENNA — Crude prices fell sharply Thursday after the powerful oil collective OPEC said it wouldn't intervene in global markets and cut production levels to stem a drop in prices that have fallen 30% since June.
Saudi Arabia's oil minister Ali Al-Naimi delivered the news as he left a meeting of the cartel in Vienna.
Oil prices plummeted over 3% to $72.11 a barrel following the announcement. In June, prices were as high as $115 a barrel.
"The oil ministers are happy, so I am happy," Abdalla Salem el-Badri, OPEC's Libyan-born secretary general said in a news conference. He brushed aside concerns about too much oil on the market leading to declining prices and said OPEC was looking for a fair price. He said the group does not target a maximum or minimum price.
"We are not tying to send signals to anybody," el-Badri said. "We should not rush or panic, we have to wait for the
market to settle. The decline in prices that we have seen does not reflect fundamentals."
Energy ministers from the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, are in Austria against the backdrop of oil prices that are at their lowest levels in four years. That drop is partly a result of output that is running ahead of demand. It is also being driven by a boom in shale production in the United States.
OPEC on Thursday re-committed to a production target of 30 million barrels a day.
"It was anti-climatic and expected," said Jamie Webster, an an energy analyst at IHS, a consultancy. "The concern I have next is that (OPEC) is just not going to go below 30 million barrels ever. If that's the case we could be in for a really wild ride over the next few months. I am very surprised that they didn't have any discussion about having another meeting before June next year."
