Oil’s plunge Thursday to levels not seen since late November raises the stakes for the Organization of the Petroleum Exporting Countries (OPEC) when the cartel meets later this month to decide whether to extend an agreement to curb output.
June West Texas Intermediate crude settled at $45.52 a barrel on the New York Mercantile Exchange, while July Brent finished at $48.38 a barrel on the ICE Futures exchange in London. Both benchmark crude contracts lost 4.8% for the session and marked their lowest settlements sinc Nov. 29, according to FactSet data.
That means prices dropped to a more than five-month low Thursday—but even more important, crude is trading at prices seen before the Nov. 30 meeting in Vienna. That’s when OPEC members agreed to reduce production levels by about 1.2 million barrels a day for six months, at the start of the new year
OPEC also reached a pact with some nonmember producers who agreed to cut output by another 600,000 barrels a day. Following the agreement, and early signs of historically-strong OPEC compliance with the pact, WTI prices climbed to as high as $54.45 and Brent to as high as $56.81 in February, according to FactSet data. Prices for both benchmark crudes have now fallen around 15% from those peaks.