Oil prices tumbled to around $44 a barrel on Monday after OPEC decided not to cut production levels at its meeting over the weekend in Vienna.
Benchmark crude for April delivery was down $1.59 to $44.66 a barrel by mid-afternoon in Europe on the New York Mercantile Exchange. Oil prices dropped 78 cents on Friday to settle at $46.25 a barrel. Earlier Monday, prices fell as low as $43.62 before a slight recovery.
Prices gained some support from news that militants had sabotaged an oil pipeline in southern Nigeria operated by Chevron Corp., slashing production by 11,500 barrels a day.
In London, Brent prices fell $1.92 to $43.01 on the ICE Futures exchange.
Members of the Organization of Petroleum Exporting Countries said Sunday they would strive to adhere more closely to the group’s current output quotas. OPEC is overshooting its daily target level of just under 25 million barrels a day by about 800,000 barrels.
Prices had risen from under $35 a barrel last month as investors anticipated OPEC would cut production by up to 1 million barrels a day on top of 4.2 million barrels of reductions announced since September.
“OPEC’s decision is widely interpreted as a measure to provide support to the global economy,” said JBC Energy in Vienna, as a new cut likely would have resulted in prices spiking considerably higher.
While some of the oil producers had voiced support for a further cut at Sunday’s meeting, others like OPEC’s de-facto leader Saudi Arabia argued instead for stricter compliance with the already-announced output reductions.
Still, with the global economy continuing to show falling demand, some analysts concluded that a new cut could still be in the books, maybe at OPEC’s special session on May 28 reviewing prices and supply.