Oil prices fell to their lowest in nearly seven years on Monday after OPEC’s meeting ended in disagreement over production cuts and without a reference to its output ceiling, while a stronger dollar made it more expensive to hold crude positions.
Brent crude prices traded down 82 cents at $42.18 a barrel and touched a low of $42.11, the lowest since March 12, 2009. US crude was down $1.12 at $38.85 a barrel, a drop of nearly 3%, Reuters reported.
The Organization of the Petroleum Exporting Countries ended its policy meeting on Friday without agreeing to lower production.
For the first time in decades, oil ministers dropped any reference to the group’s output ceiling, highlighting disagreement among members about how to accommodate Iranian barrels once western sanctions are lifted.
“A stronger dollar and the aftershock of Friday’s OPEC meeting are weighing on the oil market,” said Tamas Varga, oil analyst at brokerage PVM Oil Associates in London. Analysts at Barclays said the lack of an OPEC production target in its written announcement was a sign of discord.
OPEC’s output of more than 30 million barrels per day has compounded an oil glut, pushing production 0.5 million to 2 million bpd beyond demand and putting many producers under pressure, especially small-sized US shale drillers that have piled up large amounts of debt.
