Investing.com - As widely expected, the Organization of the Petroleum Exporting Countries (OPEC) failed to place a ceiling on oil production at their meeting on Thursday in Vienna.
In the official statement, OPEC president Mohammed Bin Saleh Al-Sada pointed to the fact that non-OPEC production was expected to further decline by 740,000 barrels per day (b/d) in 2016, after hitting its peak in 2015.
He noted that OPEC expects global demand to grow by 1.2 million b/d in 2016.
“This demand growth remains relatively healthy considering recent economic challenges and developments,” Al-Sada said.
The OPEC president noted that prices had increased more than 80% since the last meeting in December and stated that “supply and demand is converging and oil and product stock levels in the OECD have recently shown relative moderation.”
“This is testament to the fact that the market is moving through the balancing process,” Al-Sada explained.
He did admit that OECD and non-OECD inventories were standing well above the five-year average and suggested that “these need to be drawn down to normal levels”.
Al-Sada pointed to the very low investment level currently prevailing in the oil industry and emphasized the need to increase upstream investment in order to achieve long-term balance in the oil markets.
“The Conference re-emphasized the coordination between Member Countries and with non-OPEC producers to ensure market stability in the global oil market; to obtain reasonable and sustainable revenue for oil-producing nations; and to provide a stable, reliable, efficient and economic supply to consuming countries and a fair return to investors in the oil industry,” Al-Sada said.
Rather than taking action to curb production levels, Al-Sada limited his comments to stating that OPEC would “closely monitor developments in the coming months, and if necessary recommend to Member Countries to meet again and suggest further measures according to prevailing market conditions.”
The following ordinary meeting will take place on November 30.
Oil hit intraday lows on Thursday after reports quoting OPEC delegates who leaked the lack of an agreement prior to the official announcement. After the initial reaction, crude pared losses. At 14:08GMT, or 10:08AM ET, U.S. crude futures traded down 1.45% to $48.30, while Brent oil slumped 1.33% to $49.06.