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Steady OPEC, ECB pull oil prices lower

OPEC said economic growth looks "patchy," while European Central Bank leaves rates steady.

By Daniel J. Graeber
The price of oil moved sharply lower after OPEC said global economic growth was "patchy." European Central Bank, meanwhile, holds interest rates steady amid lackluster growth. File photo by Monika Graff/UPI | <a href="/News_Photos/lp/c313604cceb1b6b6f9e5229fe9f1b33c/" target="_blank">License Photo</a>
The price of oil moved sharply lower after OPEC said global economic growth was "patchy." European Central Bank, meanwhile, holds interest rates steady amid lackluster growth. File photo by Monika Graff/UPI | License Photo

NEW YORK, June 2 (UPI) -- The prospects of a stand-still agreement from members of OPEC and a lackluster outlook for the European economy pushed oil prices lower early Thursday.

Qatari Oil Minister Bin Saleh al-Sada said from Vienna that oil demand was "healthy" and the global supply of oil was on pace for a contraction. That suggests balance is returning to a market that suffered under the strains of oversupply during much of last year.

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From a global economic standpoint, Sada said growth should be 3.1 percent higher than 2015, though that estimate is lower than OPEC forecast earlier this year.

"With regard to global economic growth, the story remains somewhat patchy," he said.

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Markets had expected a statement on production as this week's meeting was the first since a call to hold output at January levels collapsed. The production proposal was geared at swaying the market balance. Before the meeting in Vienna, Saudi Oil Minister Khalid al-Falih told energy media service Argus economic forces remained influential for energy.

"It is a good thing that OPEC still operates, speaks, holds meetings given the circumstances that some countries have experienced," he was quoted as saying. "It is an economic organization, and we try to keep it economic."

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Crude oil prices struggled for clear momentum in the lead up to Thursday's meaning in Vienna, but turned lower by the open of the trading day in New York. The price for Brent crude oil fell by 1.6 percent to start the day at $48.91 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, lost 2 percent from the previous close to open at $48.05 per barrel.

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U.S. economic data continued to show modest improvement, as the number of first-time claims for unemployment moved lower. The European Central Bank, meanwhile, said it was holding key interest rates unchanged as the region reported steady, but slow, economic growth.

First quarter gross domestic product in Europe increased 0.5 percent during the first quarter, after a 0.3 percent growth during fourth quarter 2015.

"The latest data point to ongoing growth in the second quarter, though possibly at a lower rate than in the first quarter," ECB President Mario Draghi said in a statement. "Looking ahead, we expect the economic recovery to proceed at a moderate but steady pace."

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