Middle East oil producers are content with low energy prices and squeezing competitors out of the market. However, other Organization of Petroleum Exporting Countries have voiced concerns, potentially signaling a turn in the oil markets, along with related exchange traded funds.
The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate oil, declined 2.7% Monday and the United States Brent Oil Fund (NYSEArca: BNO) dipped 0.5%. While USO staged a 6.7% rebound and BNO jumped 22.2% over the past month, both WTI and Brent are beginning to slide again. [Oil ETFs: Investment Banks Cut Crude Outlook on Supply Glut]
If crude oil continues its downward trajectory, Nigeria’s oil minister and OPEC president Diezani Alison-Madueke said members of OPEC are cogitating on an emergency meeting in response to the growing impact on their economies, reports Anjli Raval for the Financial Times.
The oil cartel has been adhering to a high production level of 30 million barrels per day, despite the plunge in oil prices, as the organization tries to defend market share or cause other high-margin producers to shutdown operations, such as the booming hydraulic fracturing shale oil industry in the U.S.
However, OPEC’s strategy is also causing adverse effects on some members, including Nigeria, Venezuela and Russia. For instance, Nigeria heavily depends on oil exports, which make up 80% of government revenue.
“Almost all Opec countries, except perhaps the Arab bloc, are very uncomfortable,” Alison-Madueke said in the FT article. If the price “slips any further it is highly likely that I will have to call an extraordinary meeting of OPEC in the next six weeks or so. We’re already talking with member countries.”