Weak quarterly results from oil companies and doubts about market efforts from OPEC pull oil prices lower in early Friday trading. File photo by Monika Graff/UPI | License Photo
NEW YORK, Oct. 28 (UPI) -- Pessimism expressed about the outcome of production efforts from OPEC members and weak quarterly results pushed oil prices lower in early Friday trading.
Members of the Organization of Petroleum Exporting Countries met Friday in Vienna to review the prospects of coordinating on a production ceiling proposed last month that is designed to correct a market favoring the supply side.
OPEC Secretary-General Mohammad Sanusi Barkindo said member states need to act as one in order to benefit not only the partnership of producers, but the global economy.
"This is our duty," he said in a statement. "It is our mission."
Last month's production proposal was met with calls for exemptions from major producers like Nigeria and Iraq. Iran has offered support for the arrangement, but said it needed to defend its market share. Russia, a non-OPEC member coordinating with Saudi Arabia, has been fluid on where it stands on production levels.
Olivier Jakob, the managing director at Swiss oil-market research group Petromatrix, said in an emailed report that leaves bigger players like Saudi Arabia shouldering the burden. Whatever is on the table already, he said, is not enough to bring OPEC to its stated ceiling.
The price for Brent crude oil dropped 0.6 percent at the start of trading in New York to $50.15 per barrel. West Texas Intermediate, the U.S. benchmark price for crude oil, was down 0.8 percent to $49.30 per barrel.
With third-quarter earnings season underway, some in the industry are expressing optimism that oil price stability was a sign of recovery for the fourth quarter. Exxon Mobil Chairman and CEO Rex Tillerson said, however, that after his company reported a decline that he was protecting long-term shareholder value, but acknowledged "the operating environment remains challenging."
Some support for a rebound in oil may come as investors digest the latest figures on gross domestic product from the United States. The Bureau of Economic Analysis reported GDP increased at an annual rate of 2.9 percent in the third quarter, an improvement over the 1.9 percent reported for the second quarter. Third quarter GDP is still lower than the same period in 2013 and 2014, however.
On oil, the OPEC leader said that just talking about production so far has brought stability back to the market, but acknowledged it may be an uphill battle.
"We are certainly living in challenging times," he said.