LONDON: Oil fell below $34 on Friday to its lowest level in almost five years as the global economic slowdown overshadowed OPEC’s record supply cuts. U.S. light crude for January delivery CLc1 fell $2.64 to $33.58 a barrel by 1150 GMT. It earlier touched $33.44, the lowest since early February 2004.
London Brent crude LCOc1 was trading 18 cents up at $43.54. Oil prices have fallen by more than $110 from their peak above $147 in July. They look set for their second biggest weekly decline since 2003. “Until traders see a sustained drop-off in the rate of demand destruction, the market will have a hard time establishing a floor,” Jonathan Kornafel, Asia Director of Hudson Capital Energy, said. “From a credibility standpoint, OPEC has no choice but to bite the bullet for the next few months.”
Oil has continued to drop despite pledges by the Organization of the Petroleum Exporting Countries (OPEC) this week to remove 2.2 million barrels per day from its supply, which will be the largest ever reduction by the producer group. OPEC kingpin Saudi Arabia’s Oil Minister Ali al-Naimi, speaking in London, said on Friday the kingdom would be pumping less oil in January and would be at its new output target in line with the group’s latest cut.
OPEC to cut output until prices stabilize: president
The OPEC oil producing cartel will continue cutting output until the price of crude stabilizes, its president Chakib Khelil said on Friday. “We will continue this reduction until the price will stabilize,” he told reporters in the sidelines of a conference of oil ministers in London, two days after OPEC had agreed to cut output by 2.2 million barrels per day (bpd).
The OPEC cut, agreed at a meeting in Algeria, failed to reverse the fall in crude prices which fell to four-year lows below 40 dollars a barrel on Thursday. Khelil, who is also Algeria’s energy minister, said prices could have gone even lower if the Organization of Petroleum Exporting Countries had not already made cuts in September and October.
“I think the question that people don’t ask is where would the price be today if we did not take a decision in September of reducing 500,000 (bpd), and if we did not make the decision in October to reduce by 1.5 (million bpd),” he said. “The prices today would have been very low, so I think we did have an impact although we did not succeed in stabilizing”
And he added: “The most important thing for us, for the producers, is how to monitor control and regulate the financial speculation which affects the oil price, whether oil price is going up and down.
“We feel very strongly that what happened in 2008 and what’s happening now is due in great part to the speculation,” he added.-SANA