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Oil Prices Fall As OPEC Maintains Production

Oil prices and the market value of energy firms have continued to fall after a key meeting of major oil producers maintained production levels despite a world glut.

Brent crude tumbled as low as $71-per-barrel on Thursday after oil ministers from the 12 nations which make up the Organisation of Petroleum Exporting Countries (OPEC) made their decision in Vienna.

The cost was $2-per-barrel higher on Friday but oil and associated energy firms including oil services company BG Group (LSE: BG.L - news) were hit by investors as weak oil costs threatened to hit dividends.

The largely expected decision to maintain a production of 30 million barrels a day appears to reflect an acceptance of the Saudi view within OPEC that short-term pain will lead to gains in the long-term.

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A global supply glut has massively depressed crude costs, with prices falling 30% since June in advance of the production decision.

Other factors behind the price slump include a strong dollar and worries about stalling energy demand in a weak global economy.

While the lower oil price has been welcome for UK households, as it has resulted in falling fuel and other costs, there are producers seeking a return to crude prices of $100-per barrel.

OPEC, which accounts for about a third of the world's oil, has come under pressure from its poorer members like Venezuela and Ecuador to slash output, as tumbling prices damage precious revenues.

However the cartel's powerful Gulf members rejected calls for a cut, unless they are guaranteed market share amid competition from US shale oil.

Speaking after the meeting, OPEC Secretary General Abdullah Al-Badry suggested all members backed the decision to stick to the present output level, telling reporters "the ministers are happy."

"I see no nagging from consumers, no nagging from producers," he said.

However, Iran's oil minister, Bijan Namdar Zangeneh said the decision was "not entirely what we wanted", and analysts have suggested others think the same.

Jamie Webster, senior director of crude oil markets at IHS (NYSE: IHS - news) consultants, said: "I think you're going to see additional tension between the OPEC ranks."

Non-OPEC member Russia has ruled out cutting production significantly in a bid to raise prices.

Moscow's problem is that it needs all the revenue it can get from oil as Western sanctions over Ukraine hit its economy and it bids to maintain its own market share.