Crude Plunges Through $60 as Producers Fail to Curb Glut By Mark Shenk - 17 ธ.ค. 2557 04:49:37 The global price of crude oil fell below $60 a barrel for the first time in five years with almost no signs producers are ready to tackle a glut. Brent oil slumped 2 percent to the lowest since May 2009 in London. West TexasIntermediate, the grade traded in New York, fell below $55 for the first time in five years before rebounding. OPEC shouldn’t be expected to cut output while other producers continue to expand, the United Arab Emirates energy minister said. U.S. drillers are benefiting as costs fall almost as quickly as prices, according to Goldman Sachs Group Inc. Crude fell about 45 percent this year as the Organization of Petroleum Exporting Countries sought to defend market share amid a U.S. shale boom that’s exacerbating a global glut. The group will refrain from cutting output even if oil prices fall as low as $40 a barrel and will wait at least three months before considering an emergency meeting, U.A.E. Energy Minister Suhail al-Mazrouei said on Dec. 14. “The market is pretty much in freefall,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by phone. “The comments from the U.A.E. minister have given us a target of $40. The U.A.E. is a close ally of Saudi Arabia and I’m sure comments and actions are coordinated.” Global Benchmark Brent for January settlement, which expired today, dropped $1.20 to end the session at $59.86 a barrel on the London-based ICE Futures Europe exchange. It was the lowest close for a contract closest to expiration since May 19, 2009. More-active February futures slipped $1.20 to $60.01. The volume of all futures traded was 22 percent higher than the 100-day average at 4:39 p.m. ICE’s Brent futures contract is based on the underlying physical price of four North Sea oil grades. Saudi Arabia, Iraq and Kuwait are among nations to sell some of their crude at premiums or discounts to Brent. WTI for January delivery rose 2 cents to settle at $55.93 a barrel on the New York Mercantile Exchange. Futures touched $53.60, the lowest intraday level since May 2009. The volume of all futures traded was 89 percent above the 100-day average. It closed at a $3.93 discount to Brent, compared with $5.15 yesterday. API Figures Prices dropped from the settlement after the American Petroleum Institute was said to report an increase in U.S. inventories. Crude stockpiles advanced 1.9 million barrels last week, ForexLive and LiveSquawk said on Twitter. Futures were at $55.22 in electronic trading at 4:46 p.m. Brent, the benchmark for more than half the world’s oil, may decline to $50 a barrel in 2015, a Bloomberg survey of analysts showed. Prices need to drop further before producers will begin dealing with the global glut, said five out of six respondents who gave a reason. OPEC’s decision on Nov. 27 not to reduce its output target of 30 million barrels a day prompted speculation that the group will let crude slide to a level that would slow U.S. drilling. ‘New World’ “This is a new world in which there is no price setter,” Daniel Yergin, the Pulitzer Prize-winning oil historian and vice chairman of Englewood, Colorado-based consultancy IHS Inc., said in an interview with Bloomberg Television. “Oil is trying to find its bottom.” The 12-member group pumped 30.56 million barrels a day in November, exceeding its target for a sixth straight month, according to a Bloomberg survey of companies, producers and analysts. It’s scheduled to meet next in Vienna on June 5. “We are not going to change our minds because the prices went to $60 or to $40,” Mazrouei told Bloomberg at a conference in Dubai. “We’re not targeting a price; the market will stabilize itself.” He said current conditions don’t justify an extraordinary OPEC meeting. “We need to wait for at least a quarter” to consider an urgent session, he said. Deep Discounts Iran is said to be offering its main crude grade to Asian customers at the deepest discount in 14 years. OPEC’s three largest members, Saudi Arabia, Iraq and Kuwait, are offering oil to Asian buyers at the deepest discounts in at least six years. “The Saudis have traditionally been the adjustment valve, cutting output as needed to get prices at a sweet spot that worked for both producers and consumers,” said Brian Youngberg, an analyst at Edward Jones in St. Louis. “They are tired of cutting oil production for the benefit of others.” The U.S. oil boom has unlocked supplies from shale formations including the Eagle Ford in Texas and the Bakken in North Dakota. While producers last week idledthe most rigs in two years, that was almost entirely for vertical machines, not the horizontal drillers used for shale output, Goldman said in a report yesterday. Production expanded to 9.12 million barrels a day through Dec. 5, data from the Energy Information Administration show. That’s the highest rate in weekly records that started in January 1983. U.S. Stockpiles WTI erased losses on speculation the EIA will report tomorrow that U.S. crude stockpiles slipped as refineries operated near the highest level since August 2005. Crude supplies fell 2.25 million barrels last week, according to the median of eight analyst responses in a Bloomberg survey. “You’ve had the hell knocked out this market,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $2.4 billion, said by phone. “The fundamentals for oil aren’t all that bad. You should see inventories drop as refineries operate at more than 95 percent of capacity.” Falling crude prices are lowering fuel costs, which should help the economy, Youngberg said. “Everyone but the energy sector benefits from lower oil prices,” Youngberg said. “This should help the U.S. economy in 2015 and give GDP a boost.” Gasoline futures tumbled 3.54 cents, or 2.3 percent, to settle at $1.541 a gallon on the Nymex, the lowest since May 2009. Diesel dropped 4.17 cents, or 2.1 percent, to close at $1.96, the least since August 2010. Regular gasoline at the pump declined 1.9 cents to $2.526 a gallon yesterday, the least expensive since October 2009, according to Heathrow, Florida-based AAA, the nation’s biggest motoring group.
Posted on: Wed, 17 Dec 2014 10:11:05 +0000
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