THE price of New York oil sank under $US34 per barrel yesterday for the first time for more than four and a half years, as weak global demand overshadowed a record OPEC output cut.
The fresh falls prompted OPEC President Chakib Khelil to stress that the cartel would continue cutting output until prices stabilise.
In morning trading, New York's light sweet crude for delivery in January dived as low as $US33.44 a barrel, which was the lowest point since April 2, 2004. The January contract, which was also driven lower in technical trading owing to its expiry on Friday, later pulled back to $US34.18, down $US2.04 from the close on Thursday.
New York prices have now plunged by about 77 per cent since striking a record high above $US147 in July as the market has been slammed by concerns that a sharp global economic slowdown will slash energy demand.
Meanwhile on Friday, London's Brent North Sea oil for February delivery edged up 11 cents to $US43.47 a barrel, after dipping as low as $US43.03.
The Organisation of Petroleum Exporting Countries (OPEC), which produces about 40 per cent of the world's crude, agreed on Wednesday to cut output by 2.2 million barrels a day in a bid to shore up the market and protect its members' revenues. "We will continue this reduction until the price will stabilise," Khelil said in London at a key gathering of oil producing and consuming nations.
This week's OPEC's output reduction, agreed at a ministerial meeting in Oran, Algeria, has failed to prevent oil diving to multi-year lows on stubborn demand fears. Many traders have also questioned whether all members of the 13-nation OPEC cartel would fully enforce the reduction.
"The global recession continues to sap demand," said BetOnMarkets analyst David Evans. "Even after OPEC cut production by more then two million barrels, oil prices have fallen below the $40 per barrel level. Prices are likely to stabilise between the $35 and $40 levels." |