LONDON: Brent crude oil hit its lowest since 2010 yesterday, falling below $90 a barrel as Saudi Arabia said it increased production last month, fanning speculation of an Opec price war.
Fast-rising oil output in North America and tepid economic growth had raised expectations the Organisation of the Petroleum Exporting Countries will cut output when it meets in November to stem a near-25-percent price slide since June.
But yesterday 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.
“It’s panic mode. Panic and capitulation. We are now in uncharted territory,” said Carsten Fritsch, commodities analyst at Commerzbank. “The rout will probably continue until Opec says enough is enough.”
Brent crude for November delivery was down 70 cents at $89.35 a barrel by 1404 GMT, after earlier touching $88.11 — its lowest since December 2010.
US November crude dropped 60 cents to $85.17 a barrel. The contract, also known as West Texas Intermediate (WTI), hit a session low of $83.59, its lowest since July 2012.
Oil output has also risen in Opec members Iraq and Libya, the group said in its monthly oil market report yesterday, despite violence and instability in both countries. Total Opec output grew by 400,000bpd to 30.47 million bpd.
Combined with disappointing economic data from Europe and Asia, that has pushed Brent more than $25 lower since hitting a year high of $115.71 in June. Brent is on track to record the 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 cut its growth forecasts for 2014 and 2015 next week.
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.
Reuters
