Brent crude oil fell to another 5-year low near $65 a barrel in volatile trade yesterday, sliding for a sixth consecutive session on signs of a growing supply glut.
Prices briefly reversed losses to trade higher ahead of the US open, with some investors betting the 40%-plus price slide since June was overdone.
But as US equity markets opened lower oil prices quickly came off again, with traders refocusing on how fast-growing US shale output has hurt the ability of Opec to manage supply.
Brent resumed its decline as an Iranian official predicted a further slump in prices if solidarity among OPEC members falters. West Texas Intermediate in New York also erased yesterday’s gains.
Futures slid as much as 1.6% in London after snapping a five-day losing streak. Crude could fall to as low as $40 a barrel amid a price war or if divisions emerge in the Organization of Petroleum Exporting Countries, said an official at Iran’s oil ministry.
Iraq will sell its Basrah Light crude next month to customers in Asia at the steepest discount in at least 11 years, following Saudi Arabia’s lead as Middle East producers seek to defend market share.
Basrah Light, a high-sulfur oil used by refiners including China Petroleum & Chemical Corp., was set at $4 a barrel below the average of Middle East benchmark Oman and Dubai grades, according to a statement from Iraq’s Oil Marketing Co.
That’s the lowest since at least August 2003. The official selling price to US buyers was cut by 30 cents compared with December, while shipments to Europe were marked up by 10 cents.
Brent and West Texas Intermediate fell to a five-year low as Iraq followed Saudi Arabia in cutting prices for crude sales to Asia, adding to signs that OPEC’s biggest members are defending market share.
Futures dropped as much as 1.3%t in London to the weakest intraday price since September 2009.
Iraq, the second-largest producer in the Organization of Petroleum Exporting Countries, reduced its Basrah Light crude to the lowest in at least 11 years, a price list for January showed.
Oil prices will stay at about $65 a barrel for at least half a year until OPEC changes its collective production or world economic growth revives, said the head of state-run Kuwait Petroleum Corp.
Oil is trading in a bear market as the US pumps at the fastest rate in more than three decades and global demand expands more slowly. OPEC decided on November 27 to maintain its output target, prompting a drop in European benchmark Brent crude to less than $70 a barrel for the first time since May 2010.
“I think oil prices will stay around the current level of $65 for six or seven months until OPEC changes its production policy, or recovery in world economic growth become more clear, or a geopolitical tension arises,” Nizar Al-Adsani, KPC’s chief executive officer, said at a conference in Kuwait City.
Iran expects oil prices at five-year lows will put “short-term pressure” on the government’s budget even as it strives to contain inflation, President Hassan Rouhani said.
Crude prices have declined about 40% from a June peak amid overproduction and slower demand growth.
The Organization of Petroleum Exporting Countries decided on November 27 to maintain its production target, prompting a drop in European benchmark Brent crude to less than $70 a barrel for the first time since May 2010.
Stock markets, oil companies, service companies and investors are reeling from Saudi’s shock decision not to support a cut in OPEC production in order to balancesupply and support prices, and the consequent slump in oil prices.
This stance is a radical departure from Saudi’s previous behaviour when supply and demand fell modestly out of balance.
In the past, a few words of support have been enough to have the oil traders scurrying back to their desks to close their short positions.
Why the change of policy on this occasion?
Algeria will press ahead with its $90 billion investment plan in the North African country’s oil and gas industry even with crude prices trading near five-year lows, said the head of state-run energy producer Sonatrach.
Sonatrach will invest $22 billion in natural-gas field development as part of the $90 billion program for 2015-19, said Sahnoun, the company’s interim chief executive officer, said at the North Africa Oil & Gas Summit conference in Algiers yesterday.
Oil prices have declined about 40% from a June peak amid overproduction and slower demand growth.
Brent crude ended last week at $69.07 a barrel.
Brent extended losses from a four-year low as Saudi Arabia offered customers in Asia record discounts on its crude, bolstering speculation it’s defending market share.
West Texas Intermediate dropped in New York.
Futures fell as much as 0.8% in London and are headed for a second weekly decline. State-run Saudi Arabian Oil Co. cut its differential for Arab Light sales to Asia next month to $2 a barrel below a regional benchmark, according to a company statement.
Oil market analysts are debating if oil will fall to $50. In North Dakota, prices are already there.
Crude sold at the wellhead in the Bakken shale region in North Dakota fell to $49.69 a barrel on November 28, according to the marketing arm of Plains All American (PAA) Pipeline LP.
That’s down 47% from this year’s peak in June, and 29% less than the $70.15 paid for Brent, the global benchmark.
West Texas Intermediate crude fell, trimming the biggest rally since August 2012 as investors weighed OPEC’s decision to let the market curb a global supply glut. Brent slid in London.
Futures dropped 0.7% in New York, decreasing for the fifth time in six days. The Organization of Petroleum Exporting Countries may hold an emergency meeting in the first quarter of next year, Venezuela’s Foreign Minister Rafael Ramirez said in an interview.
The group’s failure to cut output at a gathering last week bodes well for US producers, according to billionaire wildcatter Harold Hamm, a founding father of the nation’s shale boom.
A fresh slide in the price of oil to a five-year low triggered more pain for energy stocks today as the London market started the week on the back foot.
The slump was accompanied by a rout across the commodities sector as the FTSE 100 Index dropped by 71.7 points to 6650.5.
With Brent crude now firmly below the 70 US dollars a barrel mark, shares in exploration firm Tullow Oil topped the fallers board with a dive of 8%, off 34.3p to 391.7p.
We’re mostly aware of the saying “May you live in interesting times”. However, it was not uttered by Chinese philosopher Confucius (551-471 BC); rather it is a 20th Century faux Confucian saying attributed to Frederic R Coudert at the Proceedings of the Academy of Political Science in the US, 1939.
Research reveals that what he actually said was, “May you live in an interesting age”.
While the “interesting times” bit appears obscure as to origin, US President Kennedy used it in a speech in June 1966: “There is a Chinese curse which says ‘May he live in interesting times’.”
Supermarkets have reacted to plunging world oil prices by cutting the cost of fuel to motorists.
First, Asda announced it was knocking 2p a litre off its petrol and diesel from tomorrow.
Then Tesco said it was cutting its petrol and diesel by 2p a litre.
The North Sea oil and gas industry was plunged into further uncertainty last night after Saudi Arabia blocked calls from poorer members of oil producers’ cartel Opec for production cuts to stop a slide in global prices.
Opec’s decision not to cut output despite huge global oversupply sent benchmark crude plunging to a fresh four-year low.
Brent oil fell more than $6 to $71.25 a barrel after the meeting of Opec ministers in Vienna, which marked a major shift away from the group’s long-standing policy of defending prices.
The decision by OPEC that the output ceiling would remain unchanged has seen the price of Brent drop below $75 for the first time since 2010.
Here is just some of the reaction from around the world following that announcement in Vienna:
Brent crude traded above $80 a barrel after China, the world’s second-largest oil consumer, cut interest rates for the first time since 2012 to bolster its economy. West Texas Intermediate also rose in New York.
Futures gained as much as 2.3% in London. The People’s Bank of China cut lending and deposit rates effective from tomorrow, according to a statement on its website.
Half of the 20 analysts surveyed predict the Organization of Petroleum Exporting Countries will reduce output, while the rest expect no change, when the group meets next week.
Oil prices have dipped below 80 US dollars a barrel for the first time in four years, boosting hopes for cheaper petrol on UK forecourts.
The price of Brent crude for December delivery fell as low as 79 US dollars a barrel after industry cartel Opec yesterday predicted that demand for its oil will be slightly lower next year at 29.2 million barrels a day.
The world’s uncertain growth outlook, with the eurozone stagnant and Chinese expansion showing signs of easing, has fuelled fears that there will be a glut of oil swilling around the global economy.
The slump in oil prices is a boon to China as the world’s second-biggest oil consumer. It’s a different story for the country as a major producer.
The slide in prices to a four-year low threatens to cut spending, production and profit for the country’s oil companies including PetroChina Co (857) Brent, the global benchmark, has fallen 26% this year to below $83 a barrel.
The decline, amid signs that global supply is outpacing demand, is pressuring profits from oil extraction across the globe. After a flurry of acquisitions and spending that’s stretched the balance sheets of Chinese oil companies, the country will also have a diminished appetite for deals, according to Sanford C Bernstein & Co.
The price of Brent crude has steadied at $86 a barrel after the announcement of a cut in Saudi-Kuwait oil output.
Production at the Khafji oilfield has been stopped temporarily for environmental reasons.
