SINGAPORE – Oil prices struggled in Asian trade on Friday after the OPEC cartel refused to cut production despite a global glut that has sent prices slumping to four-year lows, with analysts warning of further falls by the end of the year.
US benchmark West Texas Intermediate (WTI) for January delivery was at US$69.04 a barrel in late-morning trade, down one cent from its settle price in electronic trading in New York on Thursday. US floor trading was closed due to the Thanksgiving holiday.
Brent crude for January turned higher, rising one cent to 72.59.
The Organization of the Petroleum Exporting Countries, which pumps out one-third of the world's oil, opted to stick by its output target, even after prices have plunged by 35 per cent since June.
The 12-nation cartel "decided to maintain the production level of 30 million barrels per day" where it has stood for three years, it said in a communique after a meeting Thursday at its headquarters in Vienna.
Oil prices were routed after the decision was announced, with WTI tanking to $67.75, a level last seen since May 2010, while Brent also plunged to a four-year low of $71.25.
"OPEC's decision to keep output is the main reason for prices to drop quite rapidly," said Daniel Ang, an investment analyst with Phillip Futures in Singapore.
"Prices are likely to be going down for the rest of the year," he said.
Ang, who closely tracks the oil market, said he expects WTI to end 2014 in the "low 60s" and Brent in the "mid-60s".
At Thursday's OPEC meeting, the cartel came under pressure from its poorer members, including Venezuela and Ecuador, to trim production as tumbling prices were eating into revenues and raising fears over their economies.
But OPEC's powerful Gulf members led by kingpin Saudi Arabia resisted the calls to turn down the taps unless they are guaranteed market share, particularly in the United States, where cheap shale gas has contributed to the global supply glut.
Energy firms take a hit
Another member, Kuwait, supported the move with the country's oil minister Ali Omair saying: "We decided that price will adjust itself based on supply and demand and that OPEC is supposed to safeguard its market share in order not to lose its clients."
He suggested the United States should also bear responsibility and lower its own output of shale oil.
Venezuelan President Nicolas Maduro said on Thursday he would keep pushing OPEC to slash output.
"We have not succeeded yet, but... we will continue to try until prices return to where they should be, at around $100 per barrel," he said in a televised address in his country, which depends on crude exports for nearly all of its hard currency revenues.
In Asia, stock markets mostly fell on Friday, with energy firms taking a beating. US markets were closed for Thanksgiving.
In Sydney Santos slumped almost 11 per cent and BHP Billiton lost 3.8 per cent, while Hong Kong-listed CNOOC was off 5.8 per cent and PetroChina lost 3.9 per cent.
However shares in airlines, whose main expense is fuel, rallied. In Hong Kong, Air China jumped 5.9 per cent, Tokyo-listed Japan Airlines added 6.2 per cent and Qantas gained 6.4 per cent in Sydney, while Singapore Airlines gaining 1.6 per cent. — AFP