Crude oil prices hammered on OPEC policy

NEW YORK, Dec. 4 (UPI) -- Crude oil prices moved sharply lower at the start of trading on word members of OPEC would not cut overall production despite the weak oil economy.

Higher crude oil production, largely from U.S. shale basins, and the expected return of Iranian crude to the global market put downward pressure on crude oil prices for much of the year.

Nigerian Oil Minister and President of the Organization of Petroleum Exporting Countries Emmanuel Ibe Kachikwu told ministers gathered in Vienna oil demand will grow next year by 1.3 million barrels per day, down from the expected full-year demand growth for 2015 of 1.5 million bpd.

Concerns about the pace of growth in China and the weak trajectory in the European economy have helped push crude oil markets toward the supply side as recovery is not enough to sop up the excess oil in production.

Nevertheless, the president said OPEC expects the global economy will grow by 3.4 percent next year, up from the 3.1 percent rate for 2015. For producers outside OPEC, the pressure from low crude oil prices, expected to endure through 2016, means a contraction in oil supply is expected.

"These developments indicate the onset of a more balanced market in 2016, with demand for OPEC crude expected to rise by 1.2 million barrels per day to average 30.8 million barrels per day for the year," he said.

His statements supported expectations the production group, now 13 members strong with the inclusion of Indonesia, was standing by existing policies rather than cutting output to put positive pressure on crude oil prices.

Brent crude oil, in a particularly volatile morning, was off roughly 2 percent to start trading in New York at $42.93 per barrel. West Texas Intermediate, the U.S. benchmark price for crude oil, lost 3 percent to open the day at $39.78 per barrel, falling below the $40 mark for the second time this week.

Ann-Louise Hittle, head of the Macro Oils division at analysis group Wood Mackenzie, said in response to email questions a status quo policy was expected.

"'Wait and see' is the best policy for the Saudis at this OPEC meeting, as low oil prices dampen global oil supply growth and support oil demand," she said.