OPEC oil ministers have decided on Thursday to maintain crude production at existing levels. The organization noted that prices around $60 a barrel is appropriate and expressed satisfaction over available supplies ahead of the high-demand American summer driving season. However, they are also raised concern over recent falls in U.S. equities markets could signify a slowdown in the world’s top energy consumer. The decision to maintain existing levels was taken despite calls to pump more supplies into a market, which is becoming increasingly tight.
Last year, OPEC ministers had decided to constrict supplies by 1.7 million barrels a day to global oil markets as they wanted to check sagging oil prices and shrink growing inventories. However, actual cuts have been only around 1 million barrels a day. Even then, these cuts have helped to bring oil prices back from levels below $50 a barrel toward $60 a barrel. Following the cut, OPEC also dented global oil inventories, raising the prospect of OPEC to lift production at some point this year.
Following the decision, Crude-oil futures fell considerably under $58 a barrel to mark their lowest level since late January. In the meanwhile, the International Energy Agency has recently said that OPEC members, which stand to produce about $620 billion worth of oil at current prices, may need to boost exports later this year if inventories continue to fall. Exp4erts are of the view that as inventories falling, there are chances that market could see a shortfall when demand is picking up later in the year.
