Oil price falls below $92 as OPEC keeps output target steady amid growing supply

The price of oil fell 2 per cent to its lowest level in a month after OPEC stuck to its current production target despite ample supplies of crude.

U.S. crude oil futures fell $1.64 to close at $91.97 Friday in New York. Brent crude, a benchmark for pricing oil used by many U.S. refineries to make gasoline, fell $1.80 to close at $100.39 in London.

The average price of a gallon of gasoline in the U.S. slipped less than a penny to $3.61 per gallon. Prices rose 10 cents during May, or 3 per cent, mainly due to refinery problems in the Midwest. Still, May prices averaged less this year than they did in either of the last two years, according to AAA.

The automobile association expects the average price of gasoline to continue to slide, and fall below $3.50 a gallon in June.

The Organization of Petroleum Exporting Countries said Friday it would keep its official output target of 30 million barrels a day — one third of the world’s daily consumption — even though world oil supplies are abundant and some regions, including the majority of the European Union, are in recession.

At the end of a meeting at its headquarters in Vienna, OPEC said that steady prices in recent months showed that the market was “adequately supplied” and that no action was needed.

Oil prices have traded in a range between $88 and $98 per barrel through the first five months of the year. The average for the year is $94.01 per barrel, just 13 cents less than the 2012 average.

OPEC has been producing more oil than members agreed to, helping to boost global supplies. Analysts say that could lead to lower prices in the coming months.

“In view of the current oversupply and in the absence of any positive surprises from OPEC, oil prices are likely to remain under pressure,” said analysts at Commerzbank in Frankfurt.

Prices are also being pressured by weak economic outlooks around the world. When economies slow, drivers, shippers and travellers use less gasoline, diesel and jet fuel.

Unemployment in the 17 countries that use the euro rose to a record 12.2 per cent in April, according to data released Friday. The region is mired in its longest recession since the shared currency was introduced in 1999.

The U.S. economy, meanwhile, grew at a modest 2.4 per cent annual rate from January through March, slightly slower than initially estimated. That, teamed with higher oil production and the use of more fuel-efficient vehicles, has sent the nation’s oil supplies soaring.

The U.S. Energy Department said the nation’s supply of oil rose last week by 3 million barrels to 397.6 million barrels, the highest level since the government started collecting the data in 1978.

In other energy futures trading on the New York Mercantile Exchange:

— Wholesale gasoline fell 5 cents to close at $2.76 a gallon.

— Heating oil fell 6 cents to close at $2.78 per gallon.

— Natural gas fell 4 cents to close at $3.98 per 1,000 cubic feet.


Pablo Gorondi in Budapest and Pamela Sampson in Bangkok contributed to this report.