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Oil prices tank as OPEC heightens oversupply worries

Friday, July 31, 2015, 20:03
This news item was posted in Business category and has 0 Comments so far.

NEW YORK: Oil prices plummeted Friday as traders digested the latest OPEC signal that crude production would not be cut despite global oversupply and falling prices. US benchmark West Texas Intermediate (WTI) for September delivery dived almost 3.0 per cent, shedding $1.40 to close at $47.52 a barrel on the New York Mercantile Exchange. Brent North Sea crude for September dropped $1.10 (2.1 per cent) to settle at $52.21 a barrel in London trade. Both contracts had tumbled on Thursday, snapping two consecutive days of gains. On Friday, the WTI futures contract clocked a fifth straight week of decline and was heading closer to its lowest level in six years, following an attempt at stabilization around $60 a barrel in the spring. “The week hasn’t been particularly kind to oil,” said Bart Melek of TD Securities. “Despite the fact we got a surprise draw in the US crude inventories on Wednesday, the market remains quite worried… that there is an oversupply situation in the crude market globally,” he said. The New York market totally erased the timid rebound it staged Wednesday after the Department of Energy reported a sharp drop in US commercial crude inventories last week. “The US crude inventories decline of 4.2 million barrels didn’t really convince the situation is going to change,” Melek said. He added that OPEC had produced in July some two million barrels per day above its production quota set in June. On Thursday, Abdullah El-Badri, secretary-general of the Organization of the Petroleum Exporting Countries, said the group would not cut output in response to lower prices. The OPEC chief, speaking in Moscow after meeting Russia’s energy minister on Thursday, he said the cartel is “not ready” to cut production, which it has officially capped at 30 million barrels per day for nearly four years. Analysts said the statement shows OPEC is determined to defend its market share as it fends off competition from US shale oil. “OPEC is telling the market that cuts will not come from them,” said Daniel Ang, an investment analyst with Phillip Futures in Singapore. OPEC is “emphasizing that it is fighting for market share,” he added.

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