Oil prices fell to their lowest in nearly seven years on Monday after OPEC's meeting ended in disagreement over production cuts and without a reference to its output ceiling, while a stronger dollar made it more expensive to hold crude positions.
The OPEC meeting fell apart as it ended in a ball of confusion. The Gulf States, like Saudi Arabia, held their ground convinced that the only course of action was to continue to pump all out despite the objections of OPEC hawks like Venezuela and Algeria. Before the OPEC press conference, OPEC delegates leaked that the cartel was going to increase its quota to 31.5 million barrels a day which would legitimize current over production.
Crude oil prices roared back after a brief slip below $40.00 per barrel when Mario Draghi failed to wow the market with his stimulus magic and speculation that OPEC may create a roadmap for a production cut next year. Yet, as the real meeting gets underway, tensions are boiling over as the Saudis try to make a case that a production cut might not matter anyway.
Saudi Arabia appears to have floated the idea of a global deal to balance oil markets and lift prices from around the lowest levels in six years although fellow producers Iran, Iraq and Russia on Thursday rejected its main idea of cutting output.
Brent settled steady and U.S. crude slightly lower on Monday after prices were whipsawed by volatility as Saudi Arabia pledged to work toward oil price stability but traders worried about a global supply glut and signs of rising U.S. stockpiles.