Oil prices hit a four-year low after a decision by OPEC to maintain output levels. Brent crude oil prices sank to $71.12 a barrel briefly on Friday, before climbing back up to just under $73.
Despite expectations that members of OPEC would take measures to stop the free fall of current prices, they instead chose to maintain current output levels of 30 million barrels a day, according to Fortune. It’s a move that is expected to benefit Thanksgiving weekend drivers, many of whom are seeing prices around $2.75 a gallon, according to Gasbuddy.com.
But the move by OPEC is anything but welcome for energy producers, with shares of Chevron, Exxon Mobil Corp., BP and ConocoPhillips tumbling between 3 and 6 percent. “Welcome to the new world of oil,” Mark Keenan, the Singapore-based head of commodities research for Asia at Societe Generale SA, told Bloomberg. “OPEC has relinquished the role of balancing the market.”
While prices have since risen below their four-year low, they are expected to remain at $70 with the possibility of sinking even lower. "We are seeing continued oversupply," Bill Hubard, chief economist at Markets.com, told Reuters. "I think $70 a barrel will be the new norm. We could see oil go considerably lower."
The latest move by OPEC is one of many to combat the rise of U.S. shale oil production and other oil sources coming from non-OPEC members, a motive which Saudi Arabia oil minister, Ali al-Naimi has done little to keep secret.