- OPEC seen keeping output elevated after discarding target
- U.S. crude inventories likely rose for 11th week, survey shows
Oil fell to a six-year low in London on speculation that OPEC, which effectively dropped formal output targets last week, will pump more crude into an oversupplied market.
Brent futures fell 1.4 percent in London after retreating 5.3 percent on Monday. The Organization of Petroleum Exporting Countries failed to agree to production curbs at a Dec. 4 meeting, instead setting aside its quota of 30 million barrels a day until members gather again in June. U.S. crude stockpiles probably expanded for an 11th week, a Bloomberg survey showed before Energy Information Administration data Wednesday.
Crude’s slump has deepened as OPEC extended a fight against U.S. shale producers and other rivals. The lack of any limit on the group may lift the lid on millions of barrels of additional supply in 2016 from countries including Iran, which is seeking to reclaim market share when sanctions are lifted. Oil stockpiles have already swollen to a record 3 billion barrels, according to the International Energy Agency.
“OPEC countries will continue to pump as much as possible for now,” Amrita Sen, chief oil analyst at consultants Energy Aspects Ltd., said in a report. “So the crude market remains oversupplied.”
Brent for January settlement fell as much as 68 cents to $40.05 a barrel, the lowest intraday level since February 2009, on the London-based ICE Futures Europe exchange, and traded at $40.14 at 1:35 p.m. London time. The European benchmark crude was at a $3.19 premium to West Texas Intermediate, the U.S. marker grade.
WTI for January delivery slumped as much as 86 cents to $36.79 a barrel on the New York Mercantile Exchange, also the lowest since February 2009. The volume of all futures traded was about 96 percent above the 100-day average. Prices are down 31 percent this year.
OPEC may hold an emergency meeting if prices drop to $30 a barrel, Widhyawan Prawiraatmadja, Indonesia’s governor to the organization, told reporters in Jakarta. The Asian country rejoined OPEC at the Dec. 4 meeting following an absence of seven years.
In China, the customs administration reported a drop in exports for a fifth month in November while a decline in imports moderated as policy makers sought to spur domestic spending. The country imported 27.3 million metric tons of crude, rebounding from a five-month low in October.
Crude inventories in the U.S., the world’s biggest oil consumer, increased by 900,000 barrels in the week ended Dec. 4, according to the median estimate in a Bloomberg survey of eight analysts. Supplies climbed to 489.4 million barrels through Nov. 27, more than 120 million above the five-year seasonal average.