Oil extended its decline amid a broader commodity rout while Venezuela predicted crude prices may drop as low as the mid-$20s a barrel unless OPEC takes action to stabilize the market.
January futures fell as much as 2.2 percent in New York as the dollar gained, making commodities priced in the U.S. currency more expensive. Saudi Arabia and Qatar are considering Venezuela’s proposal for an equilibrium price of $88 a barrel, Venezuelan Oil Minister Eulogio Del Pino said Sunday. The Organization of Petroleum Exporting Countries should make room for increased Iranian production, the nation’s Oil Minister Bijan Namdar Zanganeh said.
Oil has slumped about 46 percent the past year amid speculation a global glut will persist as OPEC continues to pump above its collective quota. The 12-member group meets Dec. 4 in Vienna to discuss the production ceiling as Iran signals its intention to boost output by 1 million barrels a day within five to six months of economic sanctions being removed.
“Any meaningful change from OPEC has to come from the big producers led by Saudi Arabia,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “While an increase in Iranian production is not a surprise, it will be a negative when it hits the market.”
West Texas Intermediate for January delivery dropped as much as 94 cents to $40.96 a barrel on the New York Mercantile Exchange and was at $41.12 at 11:57 a.m. Hong Kong time. The December contract expired Friday after declining 0.4 percent to close at $40.39, the lowest settlement since Aug. 26. The volume of all futures traded was about 83 percent above the 100-day average.
Brent for January settlement fell as much as 62 cents, or 1.4 percent, to $44.04 a barrel on the London-based ICE Futures Europe exchange. The contract rose 48 cents to $44.66 Friday. The European benchmark crude traded at a premium of $3.07 to WTI.
OPEC has pumped above its collective target for the past 17 months, according to data compiled by Bloomberg. Venezuela is urging the group to adopt an “equilibrium price” that covers the cost of new investment in production capacity, Del Pino told reporters in Tehran.
Hedge funds are betting OPEC won’t do anything next month to keep crude oil above $40 a barrel. Money managers’ net-long position in WTI crude fell 17 percent in the week ended Nov. 17 to the lowest in more than two months, data from the U.S. Commodity Futures Trading Commission show.