Brent crude dropped to a low of four years to below $79 per barrel after data from china showed further slowdown in the economy and Saudi Arabia kept silent about any possible cuts in production.
In October, China’s economy lost momentum with investment growth hitting a low of almost 13 years and factory growth dipping, thus reinforcing expectations of slower rise in demand for fuel.
According to Fox Business, December delivery Brent crude dropped to $78.98 per barrel by $1.40 after falling to an intraday low of $78.65, the lowest from Sept. 2010. US light crude dropped to $75.58 per barrel by $1.60, the lowest for more than three years.
US stocks dropped more than expected last week as refineries increased their output and gasoline stocks gained, according to the Energy Information Administration’s data on Thursday.
Demand for oil from the Organization of the Petroleum Exporting Countries (OPEC) will drop to 29.2 million barrels a day next year, around 1 million barrels per day less than the current output.
The Wall Street Journal reported that the EIA said on Thursday that US production increased to more than 9 million barrels per day in the week closing November 7. This is the first time that the output has exceeded this level in weekly data from EIA since 1983.
Saudi Arabia, the most powerful OPEC member has refrained from supporting a cut, adding speculations that it is concerned about keeping its market share rather than supporting prices.
Ali al-Naimi, Saudi Oil Minister said, “We do not set the oil price. The market sets the prices.’
Carsten Fritsch, Commerzbank oil and commodities analyst said that traders understood his comments to mean that the Saudis would let the prices go down further. He said, ‘That is sort of benign neglect- at least that is what the market thinks.”
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