Oil price falls to five-year low: Opec decides to maintain production

OIL PRICES could be heading below dollars 14 a barrel, after sinking to new five-year lows yesterday following Opec's decision to keep pumping oil at current levels.

Energy prices tumbled for a second day running. January North Sea Brent crude futures closed in London at dollars 14.56, a drop of 58 cents, on the International Petroleum Exchange after hitting a low of dollars 14.18.

Oil traders were deeply disappointed at the agreement by the 12 members of the Organisation of Petroleum Exporting Countries late on Wednesday to leave Opec's production ceiling unchanged at 24.5m barrels per day, the level it agreed in September. The markets believed an output cut of at least 500,000 bpd was necessary to prop up prices.

'It's one of the worst Opec meetings we could have had,' an IPE floor trader said. 'Since Monday, the market has fallen away nearly dollars 2, because Opec failed to do anything but continue pumping under their September agreement . . . Prices could head for dollars 13.'

Energy markets in London were particularly active, with US commodity markets shut until Monday for the Thanksgiving holiday. The IPE estimated it achieved a record volume of 111,555 contracts.

Oil prices have slumped by 20 per cent this year amid low demand from recession-worn industrialised countries, increased production from non- Opec producing countries such as Britain and Norway, and high inventories held by consuming countries.