OPEC decision to keep output high pulls oil prices close to 2015 lows

* OPEC fails to agree production ceiling
* Group regularly breaches quote of 30 million barrels per
day
* Analysts expect prices to fall further as glut balloons

By Henning Gloystein
SINGAPORE, Dec 7 (Reuters) - Crude prices fell on Monday in
the first trading session after OPEC-members failed to agree on
output targets to reduce a bulging glut that has resulted in oil
prices falling by more than 60 percent since June 2014.
The Organization of the Petroleum Exporting Countries
failed to agree on an oil production ceiling on Friday at a
meeting that ended in acrimony after Iran said it would not
consider any production curbs until it restores output scaled
back for years under Western sanctions.
This compounded an oil glut that sees production exceed
demand between 0.5-2 million barrels per day and that has
resulted in a more than 60 percent price drop since 2014.
U.S. crude CLc1 was trading at $39.58 a barrel at 0038
GMT, down 39 cents. Internationally traded Brent futures LCOc1
were down 16 cents at $42.84 per barrel. This left both
benchmarks near 2015 lows and not far off levels seen during the
peak of the global financial crisis of 2008/2009.
Analysts said that OPEC would likely maintain its production
around current levels of 31.5 million barrel per day and that a
decision on how to handle new volumes expected to come to the
market once western sanctions against Iran are dropped would be
delayed until the group's next meeting in June 2016.
"Past communiques have at least included statements to
adhere... or maintain output in line with the production target
(of 30 million barrels per day). This one glaringly did not,"
Barclays (L:BARC) bank said.
Not only did OPEC decide to keep its output target high, but
analysts said that it would likely continue to exceed its quota
as individual members offer discounts to customers in defense of
market share.
Barclays said that OPEC faced an "impossible trinity of
achieving higher market share, higher prices and higher demand
through a nominal target which members continue to breach."
As a result of ongoing oversupply, analysts said that prices
would fall further, with Goldman Sachs (N:GS) seeing a possibility of
$20 per barrel.
"The effective removal of the OPEC quota leaves the market
in a more vulnerable position. Prices are likely to weaken this
week as the market turns its attention back on U.S. supply," ANZ
bank said, referring to near record U.S. crude inventories of
almost 490 million barrels.
"The formal production target was not even discussed,
essentially signalling to the market that members would continue
production at individual requirements. With Iran exports likely
to start increasing next year, this increases the likelihood of
further weakness in crude oil markets," it added.

(Editing by Michael Perry)