West Texas Intermediate and Brent extended declines from the lowest close in more than five years amid speculation that US oil producers will fight OPEC for market share.
Futures dropped as much as 1.8% in New York and 1.9% in London. Explorers in the U.S. increased the number of operating rigs last week, defying predictions of a drilling slowdown, according to data from Baker Hughes Inc.
Brent’s 14-day relative strength index has been below 30 since November 27, a reading that signals crude is oversold.
Oil is trading in a bear market amid signs that US output is expanding even after the Organization of Petroleum Exporting Countries opted not to reduce its production target.
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.
Not only is OPEC refraining from cutting oil output to stem the five-month plunge in prices, it’s adding to the supply glut.
Just five days after the Organization of Petroleum Exporting Countries decided to maintain production levels, Iraq, the group’s second-biggest member, inked an export deal with the Kurds that may add about 300,000 barrels a day to world supplies.
In a global market that neighboring Kuwait estimates is facing a daily oversupply of 1.8 million barrels, the accord stands to deepen crude’s 39% plunge since late June.
We all need to remember, but often choose to forget, that the oil & gas exploration and production is a highly cyclical business. There have been seven significant price cycles since 1970 and also a few minor ones between times, so yet another should come as no surprise.
The real surprise is that no one ever seems to build the probability into their business planning!
The reasons for the fall in Brent crude prices from $115 in June to below $71 following November’s OPEC meeting are well documented, as is the realisation that Saudi Arabia is now defending market share, rather than a minimum price.
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.
West Texas Intermediate tumbled below $65 a barrel to the lowest level since July 2009 amid speculation prices have further to drop before OPEC’s decision to maintain output slows US shale supply.
Benchmark futures in New York and London slumped more than 3% after capping their biggest monthly loss in about six years as the Organization of Petroleum Exporting Countries signaled the group will leave it to the market to reduce a global glut. Current prices are no guarantee of a significant decline in US shale output, Iran’s Oil Minister Bijan Namdar Zanganeh said on November 28.
Oil has collapsed into a bear market as the US pumps crude at the fastest rate in three decades while global demand growth slows. OPEC last week resisted calls from members including Venezuela, Iran and Iraq to reduce its production target of 30 million barrels a day at a meeting in Vienna.
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:
OPEC left its oil-output target unchanged, resisting calls from Venezuela for action to halt this year’s plunge in prices.
The group maintained its collective ceiling of 30 million barrels a day, Ali Al-Naimi, Saudi Arabia’s oil minister, said today after the 12-member producer group gathered for talks at its headquarters in Vienna.
Brent crude fell below $75 a barrel after the decision, for the first time since September 2010.
OPEC won’t cut its collective crude output when it meets later this month and global oil prices will stabilize once the surplus is absorbed by the market, Kuwait Oil Minister Ali Al-Omair said.
OPEC, which supplies about 40 percent of the world’s oil, meets November 27 to debate supply. The 12-member Organization of Petroleum Exporting Countries, which has a production target of 30 million barrels a day, pumped 30.974 million barrels a day in October, according to data compiled by Bloomberg.
“I don’t think there will be any cut in the production,” Al-Omair said at a conference in Abu Dhabi in the United Arab Emirates. “We feel prices will settle down once surplus oil is absorbed.”
