Oil Sinks to Four-Year Low Below $90 as OPEC Ups Supplies
New York: Global oil prices sank below $90 a barrel on Friday to the lowest level in nearly four years, with US crude falling to a two-year low, as growing oil supply and weak economic signals fuelled what is now a near four-month price rout.
Fast-rising oil output in North America and tepid economic growth had raised expectations that the Organization of the Petroleum Exporting Countries (OPEC) will cut output when it meets in November to stem a near-25-per cent price slide since June.
But on Friday, Saudi Arabia said it had boosted its oil production by 100,000 barrels per day (bpd) in September, raising doubts the world’s top exporter would be prepared to take unilateral action to cut in the near future.
Oil output has also risen in OPEC members Iraq and Libya, despite violence and instability in both countries, the group said in its monthly oil market report on Friday. Total OPEC output grew by 400,000 bpd to 30.47 million bpd.
“The dual combination of economic fear and ample supplies continue to pressure oil. The market just cannot find a bottom,” said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
Brent crude for November delivery fell 58 cents at $89.47 a barrel by 1518 GMT (8:48 p.m. in India), after earlier touching $88.11 – its lowest since December 2010.
US November crude dropped 78 cents to $84.99 a barrel. The contract earlier hit a session low of $83.59 – its lowest since July 2012.
Disappointing economic data from Europe and Asia, has also helped push Brent more than $25 lower since hitting a year high of $115.71 in June. Brent is on track to record a third straight week of losses.
Global shares fell to a six-month trough as concern about a recession in Germany deepened early on Friday, after sources in the ruling coalition said Europe’s largest economy would next week cut its growth forecasts for 2014 and 2015.
China, the world’s second-largest oil consumer, is also seeing signs of a slowdown. Data due next week is forecast to show that softer domestic demand probably slowed growth in China’s imports, investment and retail sales to multi-month or multi-year lows in September.
Cuts to Iran’s official selling prices for its crude raised more doubts about OPEC’s willingness to curtail supply in an effort to stabilise prices, and analysts said other producers could follow suit.
Any action is unlikely before OPEC’s Nov. 27 meeting. On Thursday, the main reference price for OPEC crude oil exports fell to its lowest since 2010, tracking the slump in global oil benchmarks.
The relentless decline in oil prices prompted investment bank Barclays to slash its fourth-quarter average forecast for Brent to $93 a barrel from $106 previously. It also cut its estimate for WTI to $85 from $98.