Oil prices fell during Thursday’s market session. The drop coincided with OPEC’s meeting in Vienna, where the announcement was made that production cuts would be extended at current levels for an additional nine months. Market analysts speculate this drop was caused by the market opinion the extension of the cuts at their current level might not have the desired effect of sufficiently reducing global oil stocks.

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The fall in oil prices did not seem to bother the Saudi Energy Minister Khalid Al-Falih, who during a press conference after the OPEC meeting stated he was unconcerned by daily market moves. Falih stated more drastic options had been considered and were deemed unnecessary. He further expressed confidence that the extension of the production cuts at current levels would have the desired effect. However, the Saudi representative said that if the desired result was not achieved by the end of this extension, the cuts could be extended again.

Some energy market analysts did not seem to share that feeling and have expressed sentiments that OPEC’s failure to take more drastic actions was a sign that the cartel had reached the limits of its capabilities. Other actions which could have been taken would have included: setting export limits or deepening production cuts. Experts feel that if OPEC had tried to deepen production cuts the strain upon members budgets may have been to severe, and as a result compliance with the cuts may have dropped.

The first round of production cuts has been cited as a key factor in keeping the price of crude oil largely above $50 a barrel but other factors have mitigated the effect of these cuts. Mitigating factors include the surge in US shale production, relatively weak demand in the US and abroad, and the failure of OPEC members’ exports to drop significantly due to selling existing stocks of oil.