Updated from 8:43 a.m. EST
Oil futures couldn't maintain their early upward trajectory and settled lower Wednesday, despite OPEC's decision to keep its output targets where they are and a big drawdown in crude stores.
The January light sweet crude contract fell 83 cents to $87.49 a barrel in New York. During morning electronic trading, it had passed $90. Refined products were also weaker, heating oil by 2 cents to $2.49 a gallon and reformulated gasoline by 3 cents to $2.22 a gallon.
Natural gas went in the other direction, tacking on 3 cents to $7.19 per million British thermal units.
The market had been split as to whether OPEC would alter its production levels, with some analysts expecting no change and others believing an increase of 500,000 barrels to 750,000 barrels a day was possible.
OPEC oil ministers, meeting in Abu Dhabi, said in a statement posted on the group's Web site that they won't add to their output "for the time being." Additionally, they will "take every measure deemed necessary to keep market stability through the maintenance of supply and demand in balance."
reported that the target for the 10 OPEC members who are subject to quotas is about 27.25 million barrels a day, but it estimates they produced around 27.1 million barrels a day last month.
Considering the recent run-up to a record high near $100 in New York and the subsequent quick 11% pullback in oil prices, OPEC disclosed plans to gather again for an extraordinary meeting Feb. 1 in Vienna. The next regular meeting will be March 5.
The decision on targets was made, OPEC said, after it reviewed the crude market outlook, including the supply and demand projections for 2008.
Market fundamentals have essentially remained unchanged, with the market continuing to be well supplied and commercial crude/product stocks remaining at comfortable levels in terms of days of forward cover," OPEC said.
Still, OPEC said it was worried prices "remained volatile, in major part due to the perception of market tightness by market players, exacerbated by non-fundamental factors, including the heavy influx of financial funds into commodities and speculative activity in the markets, while geopolitical developments have contributed to price volatility."
The other significant news of the day came from the Energy Department, who released its weekly report on petroleum inventories.
According to the government, crude stocks fell by nearly 8 million barrels last week, a decline that was much greater than expected. Gasoline inventories increased by 4 million barrels, whereas a slight draw had been forecast. Distillates rose by 1.4 million barrels, more than twice the build that was anticipated.