Investing.com -- U.S. crude futures plunged below $38 a barrel falling to fresh six-year lows, in the first full day of trading since OPEC concluded a rancorous meeting by leaving its output ceiling unchanged amid divisiveness among members on the need for production cuts.
On the New York Mercantile Exchange, WTI crude for January delivery traded between $37.51 and $39.97 a barrel, before settling at $37.70, down 2.30 or 5.79% on the session. U.S. crude futures fell below previous six-year lows from August when it traded at $37.75, its lowest level since the height of the Financial Crisis. Since peaking above $100 a barrel in June, 2014, the front month contract for WTI crude has slumped by more than 80%.
On the Intercontinental Exchange (ICE), brent crude for wavered between $40.60 and $43.22 a barrel, before closing at 40.73, down 2.26 or 5.26% on the day. At one point in U.S. afternoon trading, North Sea brent futures fell to its lowest level since March, 2009.
Meanwhile, the spread between the international and U.S. domestic benchmarks of crude stood at $3.03, slightly below Friday's level of $3.04 at the close of trading.
Following a lengthy, contentious six-hour meeting on Friday, OPEC announced that it is leaving its output ceiling unchanged at 30 million barrels per day. Over the last year, OPEC production has lingered around record-highs at 31.5 million bpd, following a strategy by Saudi Arabia to ramp up output in an apparent effort to squeeze out higher-priced U.S. shale producers. As a result, crude prices have remained near multi-year lows throughout the calendar year amid a glut of oversupply.
OPEC leaders appear hesitant to alter their strategy until a bevy of economic sanctions against Iran are lifted against the Gulf state next year. When the sanctions are fully eased, Iran is expected to boost its production by as much as 1 million barrels per day.
"The future of OPEC is as strong as ever," OPEC Secretary General Abdullah al-Badri said at a press conference following the meeting. "We have to accommodate Iran one way or the other. Also, production changes from time to time so we decided to postpone this decision to the next OPEC meeting."
OPEC is not expected to alter its output strategy until its meets again in Vienna next June.
The severe downturn in oil prices has weighed on smaller OPEC member states, such as Venezuela, Ecuador and Nigeria, whose economies are heavily reliant on oil proceeds. The countries, though, have met resistance from Saudi Arabia, which has an abundance of oil in reserves to absorb short-term losses. Last month, the International Energy Agency (IEA) estimated that OPEC's annual revenue may dip to $550 billion from a five-year average of more than $1 trillion due to the decrease in crude prices.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, jumped more than 0.35% to an intraday high of 98.90. Last week, the dollar surged to a 2015 yearly-high at 100.60 before crashing 2.40% last Thursday when European Central Bank Mario Draghi rattled global markets by approving limited easing measures at a closely watched meeting in Frankfurt.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.