Investing.com - Oil prices fell sharply on Friday, as market players reacted to OPEC's decision to leave its production ceiling unchanged at a contentious meeting in Vienna.
As a result, crude prices are expected to remain stubbornly low amid a glut of oversupply on global energy markets.
On the ICE Futures Exchange in London, Brent oil for January delivery sank 84 cents, or 1.92%, on Friday to close the week at $43.00 a barrel. Prices fell to $42.43 on Wednesday, the weakest level since August 24.
On the week, London-traded Brent futures dropped $1.86, or 4.14%, the second straight weekly decline.
The Organization of the Petroleum Exporting Countries decided to maintain current production levels at around 31.5 million barrels per day after the divided group was unable to agree on a strategy to curb the continuing oversupply on global energy markets.
In a statement following the conclusion of the meeting, OPEC said that it would “continue to closely monitor developments in the coming months". The oil cartel's next meeting is scheduled for June.
Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by OPEC last year not to cut production in order to defend market share.
Elsewhere, on the New York Mercantile Exchange, crude oil for delivery in January tumbled $1.11, or 2.7%, to close the week at $39.97 a barrel. It earlier touched $39.60, the lowest since November 20.
Market players shrugged off a report from industry research group Baker Hughes (N:BHI) late Friday, which showed that the number of rigs drilling for oil in the U.S. decreased by 10 last week to 545. A lower U.S. rig count is usually a bullish sign for oil as it signals potentially lower production in the future.
For the week, New York-traded oil futures slumped $1.74, or 4.17%, the second consecutive weekly loss, amid worries over ample domestic supplies.
The U.S. Energy Information Administration said that crude oil inventories rose by 1.2 million barrels last week, the 10th straight weekly gain. Total U.S. crude oil inventories stood at 489.4 million barrels, remaining near levels not seen for this time of year in at least the last 80 years.
The oil market has been on the defensive in recent months amid uncertainty about how quickly the global glut of crude is set to shrink.
In the week ahead, investors will be looking ahead to Friday’s U.S. data on retail sales and inflation for fresh indications on the strength of the economy.
Data last week showed that the U.S. economy created 211,000 jobs in November, beating expectations for 200,000. The unemployment rate held steady at 5.0%, matching forecasts.
The robust data solidified expectations that the Federal Reserve will hike interest rates for the first time since 2006 at its upcoming meeting on December 15-16.
Markets will also be watching a raft of Chinese economic data this week, including a report on the trade balance as well as data on consumer price inflation.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday as there is no relevant data on that day.
Tuesday, December 8
China is to release data on the trade balance.
Later in the day, the American Petroleum Institute, an industry group, is to publish its weekly report on U.S. oil supplies.
Wednesday, December 9
China is to producer data on both consumer and producer price inflation.
The U.S. is to publish weekly data on crude oil stockpiles.
Thursday, December 10
The Organization of Petroleum Exporting Counties will publish its monthly assessment of oil markets.
The U.S. is to release the weekly report on initial jobless claims.
Friday, December 11
The International Energy Agency will release its monthly report on global oil supply and demand.
The U.S. is to round up the week with reports on retail sales, producer price inflation and preliminary data on consumer sentiment.