Oil extended its decline amid a broader commodity rout while Venezuela predicted crude prices may drop as low as the mid-$20s a barrel unless Opec takes action to stabilise the market.
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The economic slowdown in China, the world’s second-largest economy, and one of the most important importers of crude oil in the world is one factor making demand slack.
Hansen said the combination of high global stocks of crude, a strong US dollar that makes oil more expensive for holders of other currencies and forecasts of a warm winter in the northern hemisphere were all weighing on investor sentiment for oil.
Brent for January settlement was 22 cents lower at $44.44 a barrel on the London-based ICE Futures Europe exchange.
“As long as markets are oversupplied, even if it’s by a shrinking amount, technical factors and the USA dollar will remain the primary price-setting mechanisms”, they said.
Oil markets were keeping an eye on developing geopolitical tensions in the Middle East as Jordan’s King Abdullah will hold talks with Russian President Vladimir Putin on how to tackle “terror groups” led by Islamic State in Syria, an official source said. Iran plans to add 1mn bpd within five to six months of the curbs being removed and that increase should be within Opec’s production ceiling, Amir Hossein Zamaninia, deputy minister for commerce & global affairs, said in Tehran on Saturday.
Benchmark front-month Brent futures for January fell 60 cents, or 1.34 per cent, to $44.06 a barrel, after ending up 48 cents at $44.66 a barrel on Friday.
The 12-nation oil cartel is scheduled to meet on December 4 in Vienna but few in the market expect OPEC to deviate from its strategy.
“It’s the statement”, SEB analyst Bjarne Schieldrop said.
Venezuela Oil Minister, Eulogio Del Pino also believes that OPEC should adopt an “equilibrium price” mechanism to restore the balance in the industry.
U.S. West Texas Intermediate (WTI) crude was also up 19 cents at US$41.94 a barrel, after hitting US$42.18 earlier in the session.
Traders are awaiting weekly US inventory data, which has shown eight straight weekly increases in domestic crude supplies.
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“Record levels of crude oil in storage with no let-up in production are likely to keep prices in a range in the coming weeks”, said Sanjeev Gupta, head of EY’s oil and gas practice for Asia-Pacific. As a result, crude prices have slipped 50% over the previous year.
