Crude Oil Jumps on OPEC’s Decision

Crude oil futures climbed on Thursday in reaction to expectations that US Federal Reserve would opt for more easing measures while OPEC decided to keep its production ceiling unchanged. The Organization of the Petroleum Exporting Countries announced that its collective production ceiling will remain flat at 30 million barrels per day. The production quota was finalized by 12 member group in a meeting in Vienna. According to survey by Platts, the average production by OPEC in May stood at 31.75 barrels per day.

Many analysts were expecting that OPEC will reduce its production quota to boost the oil prices which are now maintained under $100. Investors were also concerned about the sanctions of European Union on Iran which will take effect by July 1st, however Saudi Arabia has committed to cover the shortfall of Iranian oil by boosting its production.

Crude oil futures contract for July delivery gained 1.6 percent or $83.91 per barrel on the New York Mercantile Exchange. Weak US economic data also came in for support for oil prices as the US initial jobless claims increased by 6,000 to 386,000 in the last week. Further consumer prices declined 0.3 percent which happens to be biggest decline in last three years.

Among other energy commodities, natural gas futures contract for July delivery advanced $0.31 to $2.495 per million British thermal units. The Energy Information Administration also released its supplies data for natural gas according to which natural gas supplies increased by 67 billion cubic feet for the week ending June 8th. Analysts on average expected the increase of 71 billion cubic feet to 75 billion cubic feet.

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