LONDON: Brent and US West Texas Intermediate crude oil prices fell to their lowest levels since March 2009 as a big Organisation of the Petroleum Exporting Countries (OPEC) producer stood by the group’s decision not to cut output to tackle a glut in the market.
Oil prices have fallen 60 percent from their June 2014 peaks, driven down by rising production, particularly US shale oil, and weaker than expected demand in Europe and Asia.
February Brent crude was down $1.06 at $46.37 per barrel, after dipping to $45.23, it’s lowest since March 2009. US crude for February was down $1.15 at $44.92 per barrel, off an intraday low of $44.21.
Ole Hansen, senior commodity strategist at Saxo Bank said the market is in a bit of a panic now and the momentum is really quite negative. We have not seen any actions or comments that could reduce this aggressive selling.
On the contrary the United Arab Emirates’ (UAE’s) oil minister, Suhail bin Mohammed al-Mazroui, said that OPEC’s November decision not to cut output had been the right one.
Further he said the strategy will not change. By not reducing output, we are telling the market and other producers that they need to be rational.
Oil prices have fallen so far that the front month February contract is now trading about $7 below the July contract, encouraging traders to hire tankers to store oil at sea.
