OPEC failure over the production targets for this year

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OPEC failure over the production targets for this year

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OPEC had failed to come to a consensus over the production targets for this year, raising concerns over a further rise in oil prices, which in turn would “adversely impact” global growth, said analysts at ICICI Bank, in a note to clients.

In response to the failed OPEC talks, oil consuming nations have said that they might be forced to dip into the emergency stocks, they said, though “even as Saudi Arabia failed to convince the other members to raise production, the biggest exporter is expected to raise its own supplies to help stabilize prices.”

Edward Meir, senior commodity analyst at MF Global wasn't surprised by the upward price reaction to OPEC’s decision, but also said he doesn’t think that this is a turning point for a sustained push higher.

He expects the bounce in oil prices to be short-lived.

Demand is slowing anyway, and “O

PEC’s

hawks may be right in that the market may be somewhat oversupplied for the moment,” he said. Read related story on Arab oil and break-even prices.

U.S. economic data Thursday showed that the number of jobless Americans who sought unemployment benefits rose slightly last week. Separate data showed that the trade deficit narrowed sharply in April. Read about jobless claims.

Natural gas sinks

Among the energy futures, natural gas was the lone decliner Thursday.

July natural gas NG11N +1.84% declined 17 cents, or 3.6%, to finish at $4.674 per million British thermal units. Prices haven’t fallen by that much since May 5, when they sank 6.7%.

The Energy Information Administration reported an increase of 80 billion cubic feet in the week ended June 3. Analysts polled by Platts had expected an increase between 74 and 78 billion cubic feet.

“To be sure, very hot temperatures in the Southeast and Northeast are forcing households and businesses to turn on their air conditioners more than they usually do during this time of year,” said Chris Lafakis, an economist at Moody’s Analytics in a report to clients. “But investors’ expectations got a little bit ahead of reality, and as such, prices are falling.”

In other energy trading Thursday, July gasoline RB1N -0.26% advanced 6 cents, or 2.1%, to end at $3.04 a gallon. July heating oil HO1N -0.23% tacked on 4 cents, or 1.4%, to close at $3.14 a gallon.