NEW YORK, Crude oil prices declined dramatically in early Wednesday trading on expectations members of OPEC would stand pat on production levels at their next meeting.
Ministers from the 12 members of the Organization of Petroleum Exporting Countries are arriving in Vienna ahead of Friday’s regular meeting. A formal decision in late 2014 to keep production steady despite evidence of a bear market for crude oil left pushed prices below the $50 mark for the first time in years.
An increase in oil production, largely from U.S. shale basins, left markets favoring the supply side amid weak global economic recovery. OPEC member Iran is anticipating higher production volumes and more of its crude oil on the market, though the overall trajectory for the group is expected to remain static. Indonesia, meanwhile, is on tap to rejoin OPEC after a nearly 10-year absence.
“We expect OPEC will likely maintain its production ceiling at the current level or adjust it upward slightly to reflect Indonesia’s re-joining the group while maintaining the goal of retaining market share in general,” analysis firm Wood Mackenzie said in an emailed statement.
Brent crude oil prices lost 2 percent from the previous session to sell for $43.53 per barrel at the start of trading Wednesday in New York. West Texas Intermediate, the U.S. benchmark price for crude oil, was down 2.1 percent from Tuesday to start the day at $41.85.
U.S. and European policymakers are scheduled to address the health of their respective economies later this week. Eurostat, the statistical office for the European Union, reported euro area inflation at 0.1 percent for November, stable when compared with the previous month.
The European Central Bank, as well as the U.S. Federal Reserve, has said a rate of inflation at or near 2 percent would be considered healthy for the medium term.