Oil Price Slumps as OPEC Refuses to Cut Down Production

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  • TEMPO.CO, Jakarta - OPEC's decision not to reduce oil production has caused the world's crude oil price to slump to a record low for the last four years. Lana Soelistianingsih, an economist at PT Samuel Aset Management, said that the meeting between oil exporter countries in Vienna on Thursday, November 27, 2014, resulted in a decision to maintain 30 million barrels per day production capacity despite the global economic slowdown.

    "As a consequence, the WTI [West Texas Intermediate] crude oil price slumped to US$69.95 per barrel and the Brent price dropped to US$72.58 per barrel," Lana added.

    The decision to maintain production will be carried on until OPEC's next meeting on June 15, 2015.

    Crude oil price has dropped by 34 percent from its highest position early this year at US$102 per barrel. Meanwhile,commodity prices continued to drop since China announced its economic slowdown starting from the first quarter 2014.

    According to Lana, the slumping oil prices would decrease other commodities prices, including gold, mineral and mining products.

    "On the other hand, oil price slump will cause the US Dollar to strengthen," Lana explained.

    Today, the US Dollar index strengthened against all currencies, while rupiah weakened to Rp 12,000 per US Dollar. The slumping oil price had also given negative impacts on Asian stock market this morning.