Oil prices ended the week at the lowest level in nearly two months, weighed down by a stronger dollar and persistent doubts about the health of the global economy. Crude prices have now dropped more than 14 percent since cresting at a 15-month high of $83.18 a barrel on Jan. 6.
Energy prices were propped up earlier in the year by predictions that China, India and other developing nations would aggressively boost petroleum imports to feed their growing economies. But China has since taken steps to control risky bank lending and to cool off its economy.
OPEC is leaving its production quotas unchanged, opting to take a cautious approach in a market awash in crude and a global economy still in the early stages of recovery.
The 12-nation Organization of Petroleum Exporting Countries early Thursday said “market fundamentals have remained weak,” even though current oil prices at about $71 are roughly double their level since December, when the group announced a record 4.2 million barrel per day cut from September 2008 levels.
“Since the market remains oversupplied and given the downside risks associated with the extremely fragile recovery, (OPEC) once again agreed to leave current production levels unchanged for the time being,” the statement said.
The Organization of Petroleum Exporting Countries (OPEC) meets in Vienna on Wednesday, with most analysts expecting the producer group, the source of more than a third of the world’s oil supply, to maintain its official output target stable around $70.
Oil prices pushed toward $69 a barrel in thin trade on Monday, with sentiment buoyed by Asian and European equities and by a decision by the G20 to keep economic stimulus measures in place. Group of 20 finance leaders, who met in London on Saturday, said they would not end economic stimulus plans until the recovery was well entrenched. Traders predicted the G20’s extended financial support would translate into higher fuel demand.
Oil prices, which fell 6.5% last week, have been trading in a range between $65 and $75 a barrel since the start of August, with prices swinging on economic data as investors seek clues about the speed of a recovery from the recession.
Crude oil prices slid to $67.26 per barrel on the New York Mercantile Exchange Tuesday, as U.S. stock markets closed flat for the second consecutive day.
Prices for light, sweet crude fell 98 cents from Monday’s closing price. Heating oil prices fell marginally, down 0.0176 cents to $1.7705 per gallon. Reformulated blendstock gasoline dropped 0.017 cents to $1.913 per gallon. Natural gas prices lost 0.109 cents to $3.52 per million British thermal units.
At the pump, the average price for a gallon of regular unleaded gasoline was $2.505 Tuesday, up a half cent from Monday’s $2.50 a gallon, AAA said.
Oil prices rose even after report that US supplies of the fuel declined by one million barrels last week, increasing optimism that energy demand will recover soon. The government reported that the nation is consuming less than it has in years and that inventories are the highest in nearly two decades. Benchmark crude for June delivery gained $1.05 to settle at $50.97 a barrel on the New York Mercantile Exchange.