Venezuelan oil minister Eulogio del Pino yesterday warned that the Organisation of the Petroleum Exporting Countries (Opec) can not allow an oil price war, and urged it to take action to stabilise the crude market soon.
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Oil prices have been cut in half over the past year after OPEC announced that it would maintain production levels or even slightly increase them to keep market share, in part through forcing producers that have higher costs to cut their output.
The organization is scheduled to meet on December 4 in Vienna.
West Texas Intermediate for January delivery dropped as much as 94 cents to $40.96 a barrel on the NY Mercantile Exchange and was at $41.12 at 11:57 a.m. Hong Kong time. “The principles of OPEC were to act on the price of the crude oil, and we need to go back to the principles of OPEC”. The European benchmark crude closed at a $2.76 premium to January WTI.
Robust output in the USA, Saudi Arabia and elsewhere pushed the oil market into oversupply in mid-2014 and has kept prices near multiyear lows all year.
The Saudi remarks came as oil prices barely held above two-and-a-half-month lows, and were greeted with a mix of enthusiasm and scepticism.
Kang said a stronger USA currency if US interest rates are hiked in coming months could weaken demand for dollar-denominated crude oil futures as the contracts will be considered expensive to other currency holders.
“The Saudis’ past promises on working for price stability has led to nothing, so it wasn’t surprising there was as much disbelief as initial excitement over today’s announcement”, said John Kilduff, partner at NY energy hedge fund Again Capital.
“I still think the primary factors in the market are the excess supplies and worries that we could have weak fuel demand growth next year”, Mr. McGillian said.
Brent futures ended up 48 cents at $44.66 a barrel. The more-active January futures increased 85 cents to $42.57.
The December contract expired on Friday after declining 0.4% to close at US$40.39, the lowest settlement since Aug 26. The group members will discuss the current crude oil market conditions and future production strategies in this annual meeting. We are destroying the price of crude oil.
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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.
