- OPEC refuses to cut production despite a glut of supplies that has sent prices tumbling by more than a third since June, with analysts warning of further falls to come
Oil prices fell further in Asia on Monday to new multi-year lows, continuing a steep selloff sparked by Organization of Petroleum Exporting Countries (OPEC)’s decision to maintain crude output in an oversupplied market.
US benchmark West Texas Intermediate (WTI) for January delivery dipped $1.55 in early Asian trading to $64.60, its lowest intraday level since July 2009. Brent crude for January sank $1.84 to $68.31, below the psychologically important $70 level.
“Negative actions in the oil market are continuing today. Investors see crude as remaining vulnerable after last week’s OPEC announcement,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
“We have not yet seen any piece of news or development that could trigger a bottoming out phase in oil prices,” he added.
The unabated price plunge comes after the 12-nation OPEC opted Thursday to maintain its collective output ceiling at 30 million barrels per day, where it has stood for three years.
The OPEC refused to cut production despite a glut of supplies that has sent prices tumbling by more than a third since June, with analysts warning of further falls to come.
The news dragged WTI down $7.54 in New York on Friday, compared with the settlement price on Wednesday, to end at $66.15 a barrel. US floor trading was closed Thursday for a holiday.
Brent meanwhile had settled at $70.15 on Friday, down $2.43 from Thursday’s close. It had earlier touched $67.90, its lowest intraday price since February 2010.
The OPEC has come under pressure from its poorer members, including Venezuela and Ecuador, to trim production as slumping prices have eaten into government revenues and raised fears over their economies.
But the group’s powerful Gulf members, led by kingpin Saudi Arabia, resisted the calls to turn down the taps unless they are guaranteed market share — particularly in the United States, where rising production of shale oil has contributed to the global supply glut.
McCarthy said weak Chinese manufacturing data released early Monday was “doing nothing to help oil prices”.
The official purchasing managers’ index for the manufacturing sector in the world’s second-biggest economy fell to 50.3 in November, from 50.8 in October.
The index tracks manufacturing activity in China’s factories and workshops and is a closely watched indicator of the health of the economy. A reading above 50 indicates growth, while anything below points to contraction.
