Oil traded near a five-year low yesterday as the United Arab Emirates (UAE) said OPEC would not cut output even if prices slumped to US$40 a barrel.
European benchmark Brent crude oil futures fluctuated in London after falling 2.9 percent on Friday last week to cap a third weekly drop.
The market would stabilize itself and OPEC would wait at least three months before considering an emergency meeting, UAE Minister of Energy Suhail al-Mazrouei said.
The International Energy Agency lowered its demand forecast for next year for the fourth time in five months amid rising supply from non-OPEC countries.
Oil prices have dropped more than 20 percent since Saudi Arabia led OPEC’s decision to maintain its production target at a Nov. 27 meeting, resisting calls from members including Venezuela to reduce supply.
Drillers in the US, who are pumping crude oil at the fastest pace in more than three decades, idled the most rigs in two years, according to Baker Hughes Inc.
“Some in the market may see an opportunity to buy so the market is stabilizing,” IHS Inc vice president Victor Shum vice president said by telephone yesterday. “Given the concerns over the oversupply situation, oil futures could go down further before an adjustment upwards would take place. We’re in for a long period of volatility.”
Brent futures for settlement next month gained as much as US$1.10 to US$62.95 a barrel on the ICE Futures Europe exchange and was at $62.15 at 3:32pm in Singapore.
The contract, which expires tomorrow, slid US$1.83 to US$61.85 on Friday last week, the lowest close since July 2009. The more active February future was US$0.26 higher at US$62.41. Brent futures traded at a premium of US$4.13 to US benchmark West Texas Intermediate.
West Texas Intermediate for delivery next month climbed as much as US$0.98 to US$58.73 a barrel in electronic trading on the New York Mercantile Exchange. It lost US$2.14 to US$57.81 on Friday last week, the lowest since May 2009. Prices have decreased 41 percent this year.
OPEC, whose 12 members supply about 40 percent of the world’s oil, is scheduled to hold discussions on June 5. While Venezuela supports an emergency meeting, it has not officially requested one, a Venezuelan Ministry of Foreign Affairs official said on Friday last week.
“We’re not going to change our minds because the prices went to US$60 or to US$40,” al-Mazrouei told reporters at a conference in Dubai on Sunday. “We’re not targeting a price; the market will stabilize itself.”
OPEC pumped 30.56 million barrels a day last month, exceeding its target of 30 million for a sixth straight month, a Bloomberg survey of companies, producers and analysts showed.
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