Oil stays below $40 after OPEC decides against output cut

US benchmark West Texas Intermediate for delivery in January was down 37 cents at USD 39.60 and Brent crude for January was trading 12 cents lower at USD 42.88 a barrel at around 0210 GMT.

December 07, 2015 / 11:04 IST

Oil stayed below USD 40 a barrel in Asia Monday after the OPEC cartel decided against slashing high output levels and traders turned their focus to a US central bank meeting next week.

US benchmark West Texas Intermediate for delivery in January was down 37 cents at USD 39.60 and Brent crude for January was trading 12 cents lower at USD 42.88 a barrel at around 0210 GMT.At a meeting in Vienna on Friday, the Organization of the Petroleum Exporting Countries (OPEC) decided against cutting its oil output to lift prices, its president and Nigerian oil minister Emmanuel Ibe Kachikwu said.OPEC, whose members together pump out more than one third of world oil, is currently producing above its official target of 30 million barrels per day despite a global crude supply glut that has battered prices for more than a year.“Crude oil were no doubt compressed by the lack of an agreement at the OPEC, signaling that the supply glut will persist longer,” Bernard Aw, market strategist at IG Markets in Singapore.

“WTI is trading below the key USD 40 (mark) and it looks set to remain there.”

Sanjeev Gupta, who heads the Asia-Pacific oil and gas practice at professional services firm EY, said market attention is now turned to a meeting of Federal Reserve policymakers and to the latest economic data from China, the world’s top energy consumer.

Traders are watching whether the Fed will raise interest rates, a move that will boost the dollar. A stronger US currency will make dollar-priced oil more expensive to holders of weaker units, denting demand and prices.