OPEC's decision to cede no ground to rival producers underscored the price war in the crude market and the challenge to U.S. shale drillers. The 12-nation group abandoned its role as a swing producer, ignoring the steepest slump in oil prices since the global recession to keep its output target unchanged.
West Texas Intermediate fell from the lowest price in more than four years as Saudi Arabia’s oil minister said the price will stabilize by itself, while the United Arab Emirates said OPEC will do what it takes to balance the market.
A funny thing happened on the way to the OPEC meeting. As a result of a pre-meeting between Saudi Arabia, Russia, Mexico and Venezuela it wasexpected that those countries were on the way to finalize a deal to cut production--then it all somehow fell apart.
Oil volatility is back and the bulls are no longer going to get a free ride bought and paid for by our friends at the Federal Reserve. Add to that the fears of a China meltdown based on a credit freeze.