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UPDATE 10-Oil drops after OPEC maintains output despite glut

Published 05/12/2015, 09:17 am
© Reuters.  UPDATE 10-Oil drops after OPEC maintains output despite glut
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* OPEC maintains near record output

* Prices turn lower, but losses limited

* U.S. energy company shares take a hit (Adds CFTC data)

NEW YORK, Dec 4 (Reuters) - Oil prices fell on Friday after news that the Organization of the Petroleum Exporting Countries was planning to maintain its production near record highs despite depressed prices, as OPEC continued to guard its share of an oversupplied market.

The producer group failed to agree on a new production quota, allowing member countries to continue pumping more than 31 million barrels per day of oil, further swelling a global glut that has depressed oil prices for over a year. urn:newsml:reuters.com:*:nL8N13T3F5

OPEC's announcement sent ripples through wider markets and dented shares of U.S. energy drillers already suffering from low prices, but losses in oil futures were limited as prices hit support around $40 a barrel. ID:nL1N13T1NH

Brent crude oil futures LCOc1 fell 84 cents, or nearly 2 percent, to settle at $43, after rising in early trade. The benchmark was within cents of August' s 6-1/2-year trough.

U.S. crude futures CLc1 fell $1.11, or nearly 2 percent, to settle at $39.97.

"There was some short covering before the announcement in case there was a production cut. When we found out that wasn't the case, we gave up the gains," said Gene McGillian, analyst at Tradition Energy in New York. "It shifted the market back to fears of oversupply."

Saudi Arabia has been under pressure from OPEC's poorer members to cut output to bolster prices, which have dropped from over $100 a barrel since June 2014. But Saudi Arabia has been content to keep production up, which has squeezed profits for producers in non-OPEC countries, including the United States.

"The heavy pressure on non-OPEC producers, especially U.S. shale, is going to be kept up," said Paul Horsnell, head of commodities research at Standard Chartered (L:STAN).

Energy company shares, including those of U.S. oil major Exxon Mobil Corp (N:XOM) XOM.N and oil service companies Baker Hughes (N:BHI) Inc BHI.N and Halliburton (N:HAL) Co HAL.N fell after the OPEC news. The S&P Energy index .SPNY fell on Friday, limiting gains in the wider stock market. .N

U.S. energy firms this week cut oil rigs for the 13th week in the last 14, data from Baker Hughes showed. urn:newsml:reuters.com:*:nL1N13T1RT

Goldman Sachs (N:GS) analysts, which expect OPEC production to remain slightly above current output at 31.8 million barrels per day in 2016, said robust supply could help keep prices low until the fourth quarter of next year. ID:nL3N13T4VP

Bullish wagers on U.S. crude oil from hedge funds and other big speculators fell to the lowest level in more than five years, data from the U.S. Commodity Futures Trading Commission (CFTC) showed. ID:nL1N13T2FV

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