West Texas Intermediate tumbled below US$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 per cent after capping their biggest monthly loss in about six years as Opec signalled 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 in an interview 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.
“It’s clear that a production war is on and it will be survival of the fittest,” Phil Flynn, a senior market analyst at the Price Futures Group in Chicago, said by email today. WTI “will see a test of $60 soon,” he said.
WTI for January delivery fell as much as 3.1 per cent, or $2.05, to $64.10 a barrel in electronic trading on the New York Mercantile Exchange and was at $64.43 at 12.26pm Singapore time. The volume of all futures traded was more than five times the 100-day average. Prices, which decreased 18 per cent in November, are down 35 per cent this year.
Brent for January settlement dropped as much as 3.3 per cent, or $2.33 a barrel, to $67.82 on the ICE Futures Europe exchange, the lowest intraday price since October 2009. The contract slid $2.43 to $70.15 on November 28. Prices declined 18 per cent last month and are 39 per cent lower in 2014.Read More