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Energy Insights: Energy News: OPEC Maintains Its Target for Daily Oil Production

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OPEC Maintains Its Target for Daily Oil Production



LONDON — With the price of oil relatively strong, OPEC decided on Friday to maintain its current target for oil production at 30 million barrels a day, a move the markets had expected.

The price of Brent crude oil, the European benchmark, has recently hovered around $100 a barrel, a level that met with the approval of most members of the Organization of the Petroleum Exporting Countries, meeting in Vienna.

“There is no compelling reason to rock the boat,” Bhushan Bahree, an analyst at market research firm IHS Cera, wrote in a research note.

At a news conference after the meeting, the OPEC secretary general, Abdalla S. el-Badri, waved off a suggestion that the $100-a-barrel level was acting as a drag on the world economy, arguing that much of the eventual price at the pump was because of taxes, not the crude oil itself.

“If the government wants to do something for their economy, they should reduce taxes so people can buy more gasoline,” he said.

Prices fell after the announcement. By midday in New York, Brent crude was down $1.11 to $101.08 a barrel, and benchmark light sweet crude fell 84 cents to $92.77.

Despite today’s prices, OPEC is losing market share to countries outside the cartel, especially the United States and Canada.

The United States is still importing substantial amounts of oil from Saudi Arabia and other Persian Gulf nations that produce heavy and medium grades of crude that Gulf of Mexico refineries are designed to process. But the boom in United States oil shale fields that produce lighter grades are quickly replacing imports from Algeria, Nigeria and other African producers.

For American drivers, the increased drilling in the United States and sluggish demand in Europe that is putting pressure on global oil prices have brought a modest amount of relief. The price for an average gallon of regular gasoline in the United States on Friday was $3.61, a drop of 4 cents from a week ago, according to AAA. Drivers spent a penny more on average for a gallon of regular gas last year.

Saudi Arabia, by far the largest producer, has cut production by about 600,000 barrels a day from a year ago, to 9.3 million, according to IHS Cera. In the same period, Iranian production dropped by 400,000 barrels a day as American sanctions took a toll on the country’s industry.

For years, oil prices rose with equity prices, but recently oil has “fallen even as the S.& P. has made record highs,” wrote Seth M. Kleinman, an analyst at Citi, in a research note, referring to the Standard & Poor’s 500-stock index. Mr. Kleinman also noted that there had been “significant liquidation” by speculators in the futures markets over the last three months.

From an OPEC perspective, the outlook for the next year is not rosy. Many analysts forecast that global demand will increase modestly this year and that most or all of the increase will be supplied by non-OPEC producers, led by the United States. If so, that would leave little room for OPEC output to grow and may force the organization to either make further cuts or allow global inventories to build.

“The second half of the year could see a further easing in fundamentals,” OPEC said Friday in a statement.

OPEC’s current quotas have been in place since 2011.

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