Friday, November 28, 2014

OPEC Decides Against Production Cuts

At a meeting in Vienna, Austria, the members of OPEC left the oil output ceiling at the previously set 30 million barrels per day.

This production level will continue to put short-term downward pressure on oil prices. Indeed, after Thursday’s decision was announced, ICE January Brent, the international oil benchmark, fell by $6.50 a barrel to $71.25, its steepest one-day fall since 2011.

The lower oil price will put major pressure on many oil producers, especially Libya, Venezuela and, domestically. US oil share operators. (SEE:"The Shale Revolution Doesn't Work At $80"). Ultimately, much marginal production will be shut down, setting the stage for the next oil advance. But, in the very short-term, the price will remain at very low levels.

(graphic via FT)

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