U.S. West Texas Intermediate (WTI) crude futures were down 68 cents a barrel at $41.22 a barrel by 1413 GMT, having touched a session high of $42.75 following the Saudi statement. A change doesn’t imply higher production because the group said it pumped 31.38 MMbpd in October, the 17th straight month above the target.
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For Asia, the losers from cheaper prices include the region’s biggest oil producer, China, followed by India, Indonesia and Malaysia, along with Australia’s emerging LNG industry.
World oil prices have more than halved in the past 18 months as global production has outpaced consumption, and the IEA on Friday predicted demand will grow by a sluggish 1.2 million barrels next year.
Energy analysts say prices will be further pressured when Iranian oil returns to the market in the coming months, exacerbating oversupply woes. However, he added that there is only about a “15% probability that this might happen” and if oil was to fall to this level, it would only be temporary “shock to the system” before the market stabilised again.
Meanwhile, Venezuela’s oil minister said on Sunday that Organisation of the Petroleum Exporting Countries (Opec) can not allow an oil price war and must take action to stabilise the crude market soon.
Brent for January settlement fell as much as 97 cents, or 2.2 per cent, to $43.69 a barrel on the London-based ICE Futures Europe exchange.
The US’ oil inventory rose to its highest point since 1972 a year ago, but plunging prices are likely to start weighing down the record-high reserves.
Speculators now hold more positions that are betting on a drop in the oil price than at any time since at least 2009, according to Reuters data.
“The market is actively seeking storage solutions”, Jefferies said, but with January 2017 prices now trading around $6 a barrel above those for January 2016, the spread is too low to make floating storage attractive as freight costs still have to be included.
“Something that really was an ordinary comment got a very strong reaction”, Mr. Levine said.
Nymex reformulated gasoline blendstock-the benchmark gasoline contract-fell 1.7% to $1.27 a gallon. Venezuela sends a large share of its oil exports to the United States because of the proximity and the operation of sophisticated U.S. Gulf Coast refineries specifically created to handle heavy Venezuelan crude.
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Jenny W. Hsu contributed to this article.
