09 December 2014, News Wires – Benchmark Brent crude slipped to its lowest in five years on Tuesday, dropping below $66 per barrel after plunging more than 4% on the day before on worries over a deepening supply glut, Reuters reported.
The chief executive of Kuwait’s national oil company on Monday said oil prices were likely to remain around $65 per barrel for the next six or seven months, the latest indication that Gulf producers are ready to ride out plunging prices, according to the news wire.
Brent has fallen over 40% since June with losses deepening in late November after the Opec decided not to cut its output target.
Since then, top oil exporter Saudi Arabia has reduced its monthly prices for crude it sells to the US and Asia, a move that analysts say shows it is stepping up its battle for market share.
“Short-term sentiment is to remain weak for crude oil given the oversupply expected in 2015 and leveraged funds still have further selling to do before fund positioning returns to neutral,” Reuters quoted ANZ analysts as writing in a note.
Brent crude for January delivery was down $0.43 at $65.76 Tuesday morning – its lowest since October 2009.
On Monday, Brent dropped $2.88, over 4%, to settle at $66.19 per barrel – its third-largest one-day percentage loss this year.
US crude fell $0.52 to $62.52 per barrel on Tuesday morning, after briefly hitting $62.25 – the lowest since July 2009. It dropped 4.2%, or $2.79, to end at $63.05 on Monday.
It is unclear how soon the price slump will slow the US shale boom. The number of onshore rigs drilling for crude oil remains relatively high, and new US projections released on Monday showed production from the big three US shale plays should carry on growing at over 100,000 barrels per day into January.
However, many companies are already starting to make deep cuts to spending for next year. ConocoPhillips said on Monday it would slash spending by 20%, or $3 billion, the biggest reduction announced so far by US drillers.
Asian markets were mostly in the red on Tuesday morning while the US dollar began to edge higher once again aided by a media report the Federal Reserve might take a rhetorical step toward tightening at its meeting next week.