West Texas Intermediate and Brent extended declines from the lowest close in more than five years amid speculation that US oil producers will fight OPEC for market share.
Futures dropped as much as 1.8% in New York and 1.9% in London. Explorers in the U.S. increased the number of operating rigs last week, defying predictions of a drilling slowdown, according to data from Baker Hughes Inc.
Brent’s 14-day relative strength index has been below 30 since November 27, a reading that signals crude is oversold.
Oil is trading in a bear market amid signs that US output is expanding even after the Organization of Petroleum Exporting Countries opted not to reduce its production target.
The 12-member group is responsible for about 40% of the world’s supply.
Falling prices will put “short-term pressure” on Iran’s budget, President Hassan Rouhani said in parliament, the Iranian Students’ News Agency reported.
“This is primarily a supply-side issue,” Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone today.
“Current supplies are too large for any foreseeable improvement in demand. The price needs to fall to a level that starts to really give the market some comfort that new projects are going to be put on the backburner and delayed.”
WTI for January delivery dropped as much as $1.21 to $64.63 a barrel in electronic trading on the New York Mercantile Exchange and was at $65.20 at 3 p.m. Singapore time.
It slid 97 cents to $65.84 on December 5, the lowest close since July 2009.
The volume of all futures traded was about 18% above the 100-day average. Prices have decreased 34% this year.
Brent for January settlement declined as much as $1.34 to $67.73 a barrel on the London-based ICE Futures Europe exchange.
The contract lost 57 cents to $69.07 on December 5, the lowest since October 2009. The European benchmark crude traded at a premium of $3.19 to WTI.
The number of U.S. rigs in operation rose to 1,575 through December 5, the first gain in three weeks, according to Baker Hughes, a Houston-based field services company.
The nation’s oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked supplies from shale formations including the Eagle Ford in Texas and the Bakken in North Dakota.
US oil production accelerated to 9.08 million barrels a day through November 28, according to data from the Energy Information Administration data.
That’s the fastest rate in weekly records that started in January 1983.
Saudi Arabia led OPEC’s decision to maintain output at a meeting in Vienna, citing the threat from U.S. shale, Iranian Oil Minister Bijan Namdar Zanganeh said on November 28.
The group pumped 30.56 million barrels a day in November, exceeding its quota of 30 million for a sixth straight month, a survey of oil companies, producers and analysts showed.
In Algeria, another OPEC member, Sonatrach will press ahead with its $90 billion investment plan in the country’s oil and gas industry even as crude trades near five-year lows, Said Sahnoun, the interim chief executive officer of the state-run energy producer, said at a conference in Algiers.
China, the world’s second-biggest oil consumer, imported 25.41 million metric tons of crude last month, according to preliminary data from the General Administration of Customs in Beijing.
Shipments increased to about 6.21 million barrels a day, up 9% from a month earlier.
Recommended for you
