Oil falls anew as OPEC emergency meet, output cut ruled out

Wednesday, 17 December 2014 00:14 -     - {{hitsCtrl.values.hits}}

Reuters: Crude prices plunged further on Monday after OPEC once again said it will not cut oil output despite fears of a glut, and a UAE official opposed holding an emergency meeting of the producer group to support prices. US crude tumbled almost 5%, extending losses after the close to come within two cents of $ 55 a barrel. Benchmark North Sea Brent fell more than 2%, nearing $ 60 in a rout that also deepened after settlement. A man changes the price for a gallon of gasoline at a gas station in Medford, Massachusetts 4 December, 2014– CREDIT: REUTERS The losses extended last week’s selloff that erased 12% from US crude and 11% from Brent. Both markets were up in Monday’s morning trade in New York before falling by noon, a trend visible in recent weeks. “It’s basically people getting squeezed out via margin calls,” said John Kilduff, partner at New York hedge fund Again Capital, said. He noted that weekly data from the Commodity Futures Trading Commission showed many still long on the market despite the six-month long price rout. In Monday’s early trade, Brent was supported by news of loading delays for January cargoes of North Sea Forties crude due to lower-than-expected output. A production glitch at the Buzzard oilfield in the UK North Sea also helped Brent, as did news that Libya’s two biggest oil ports were shut from fighting between armed factions. Selling pressure emerged by midmorning after UAE’s Oil Minister Suhail Bin Mohammed al-Mazroui added to bearish comments by OPEC Secretary-General Abdullah al-Badri. Al-Mazroui said there was no need for an emergency OPEC meeting to help support prices. Venezuela and Algeria, which need higher oil prices for their economies, were among OPEC members that had proposed an emergency meeting after OPEC’s summit in Vienna last month did not agree on output cuts. OPEC’s next meeting is in June 2015. OPEC’s Al-Badri, meanwhile, said the 12-member Organization of the Petroleum Exporting Countries could ride out the near 50% oil price slump since June without amending production. US crude settled down $ 1.90, or 3.3%, at $ 55.91 a barrel. It fell thereafter to a new May 2009 low of $ 55.02. Brent finished down 79 cents, or 1.3%, at $ 61.06. It fell post-settlement to $ 60.20, a bottom since July 2009. The disparity in their drop extended Brent’s premium versus US crude to a one month-high above $ 5. The spread between Brent’s front-month January and nearby February also narrowed, to around 20 cents a barrel from Friday’s 30 cents. US crude sold off more sharply on fears of another sharp inventory build in the United States last week, traders said.

 Gulf can cope with cheaper oil, IMF says as bourses plunge

  DUBAI(Reuters): The Arab energy exporting states of the Gulf can cope comfortably with sliding oil prices, an International Monetary Fund official said on Tuesday, as a plunge in regional stock markets showed some local investors were panicking. Brent crude oil dropped below $60 a barrel on Tuesday for the first time since 2009, from around $115 as recently as June. If those levels persist next year, the six rich nations of the Gulf Cooperation Council will face the most dramatic change in their fortunes since the global economic crisis in 2008. All except Qatar would run state budget deficits as oil revenues shrank; Bahrain and Oman would be deep in the red. Harald Finger, the IMF’s head of mission for the United Arab Emirates, told a financial conference in Dubai that because the big GCC economies had built up huge fiscal reserves, they would not have to cut state spending deeply, and could therefore avoid sharp economic slowdowns. “Most of the GCC countries have quite significant buffers in the form of foreign assets in sovereign wealth funds or central banks, plus most of these countries have a capacity to borrow, so there is no need now for a very steep and quick reduction of spending, which would not necessarily be desirable,” he said. But as he spoke, GCC stock markets were tumbling in a rout which erased about $49 billion of market value on Tuesday alone. Saudi Arabia’s stock market closed 7.3% lower, while Dubai also lost 7.3%, bringing its losses this month to 28%. Qatar sank 3.5%. The collapse over recent weeks suggests the impact of low oil prices on Gulf business and investor sentiment could be greater than the monetary hit to governments’ balance sheets.