Oil trades at lowest level in 5 yearsOil traded near a five-year low as the United Arab Emirates said Organization of Petroleum Exporting Countries (OPEC) will refrain from cutting output even if prices slump to $40 a barrel.
Brent futures fluctuated in London after falling 2.9 percent on Friday to cap a third straight weekly drop. The market will stabilize itself and OPEC will wait at least three months before considering an emergency meeting, U.A.E. Energy Minister Suhail Al-Mazrouei said. The International Energy Agency (IEA) lowered its 2015 demand forecast for the fourth time in five months amid rising supply from non-OPEC countries.
Oil has lost more than 20 percent since Saudi Arabia led OPEC’s decision to maintain its production target at a Nov. 27 meeting, resisting calls from members including Venezuela to reduce supply. Drillers in the U.S., pumping crude at the fastest pace in more than three decades, idled the most rigs in two years, according to Baker Hughes Inc.
“Some in the market may see an opportunity to buy so the market is stabilizing,” Victor Shum, a Singapore-based vice president at IHS, an industry consultant, said. “Given the concerns over the oversupply situation, oil futures could go down further before an adjustment upward would take place. We’re in for a long period of volatility.”
Brent for January settlement gained as much as $1.10 to $62.95 a barrel on the ICE Futures Europe exchange. Singapore time. The contract, which expires tomorrow, slid $1.83 to $61.85 on Dec. 12, the lowest close since July 2009. The more active February future was 69 cents higher at $62.84. The European benchmark crude traded at a premium of $4.20 to WTI.
West Texas Intermediate for January delivery climbed as much as 92 cents to $58.73 a barrel in electronic trading on the New York Mercantile Exchange. It lost $2.14 to $57.81 on Friday, the lowest since May 2009. The volume of all futures traded was more than four times the 100-day average. Prices have decreased 41 percent this year.
OPEC, whose 12 members supply about 40 percent of the world’s oil, is scheduled to hold discussions on June 5. While Venezuela supports an emergency meeting, it hasn’t officially requested one, a foreign ministry official said Friday.
“We’re not going to change our minds because the prices went to $60 or to $40,” the U.A.E.’s Mazrouei told Bloomberg at a conference in Dubai on Dec. 14. “We’re not targeting a price; the market will stabilize itself.”
OPEC pumped 30.56 million barrels a day in November, exceeding its target of 30 million for a sixth straight month.
U.S. rigs targeting oil fell by 29 to 1,546 in the week ended Friday, the biggest drop since December 2012 and the lowest level since June, according to data from Baker Hughes, a Houston-based field services company. A combination of horizontal drilling and hydraulic fracturing has unlocked supplies from shale formations including the Eagle Ford in Texas and the Bakken in North Dakota.
Production in the U.S. increased to 9.12 million barrels a day through Dec. 5, data from the Energy Information Administration shows. That’s the fastest rate in weekly records that started in January 1983, said the Energy Department’s statistical arm.
“Who’s going to cut first? That’s the global poker game going on at the moment,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said. “The market is clearly focused on the negatives for oil.”
Libya, the holder of Africa’s largest oil reserves, declared force majeure at its Es Sider and Ras Lanuf ports amid an armed conflict. National Oil Corp. will halt output at some fields and take measures to protect wells, pumps and pipelines, according to a statement.
Global oil consumption in 2015 will expand by 230,000 barrels a day less than projected in November, the IEA said in its monthly report on Saturday. The Paris-based adviser boosted its estimate for supply outside OPEC by 200,000 barrels a day, predicting daily output will climb by 1.3 million a day after gaining by a record 1.9 million this year.