11 November 2014 – Brent crude traded around $82 a barrel on Tuesday, just above a four-year low hit last week, with a firm dollar and robust production from US shale oilfields offsetting a drop in output in Libya.
The price has fallen nearly 30% since late June and all eyes are on Opec for indications of whether the oil cartel will cut prices at a meeting on 27 November.
Brent crude for December delivery was down 43 cents at $81.91 a barrel early on Tuesday after settling more than $1 lower in the previous session.
Earlier on Tuesday it touched $81.87, just above the $81.63 seen last week, which was the lowest since October 2010. The December contract expires on Thursday.
Brent fell for the seventh straight week last week, the longest losing streak since late 2002. US crude was 38 cents lower at $77.03 per barrel after closing $1.25 lower.
The drop in prices this year is due in part to rising production from non-Opec countries, in particular the US.
Lower prices have had little impact on drilling there, with output from the country’s fastest-growing and largest shale fields showing no sign of slowing down, the US Energy Information Administration said.
“US producers may begin to cut production next year. The market may rebound if we see confirmation of that, but as long as production keeps rising from non-Opec countries, the market will continue to fall,” said Yusuke Seta, a commodity sales manager at Newedge Japan in Tokyo.
Libya’s oil output rose above 900,000 barrels per day in September, well above June lows of 100,000 bpd, but has fallen back again to around 500,000 bpd at most.
An alternative government in Libya that has seized the capital has taken control of the country’s biggest oilfield, El Sharara.
The strong US dollar continued to weigh on commodities, including oil.
“The next short-term target for Brent is $80, but from a technical point of view it looks unlikely to break that level,” said Seta. “I don’t see a big oversupply in the physical market now compared to over the summer months. We should see some winter demand,” he said.
JPMorgan Chase & Company has slashed its 2015 Brent price forecast by $33 to $82 per barrel, citing supply pressures in the Atlantic basin and the apparent inability of Opec member states to work cohesively to restrain production and rebalance the market.