Oil in London slid below US$45 a barrel for the first time since March 2009 as Iran reiterated it would boost production and US drillers showed no signs of slowing.
Brent futures fell as much as 3.2 percent, extending a 7.3 percent drop last week, the most in five months. Iran is to expand output “at any cost” to defend market share, Iranian Oil Minister Bijan Namdar Zanganeh said, according to his ministry’s news Web site. The number of active oil rigs in the US rose for the seventh time in eight weeks, Baker Hughes Inc data showed on Friday.
Oil’s worsening global surplus has fueled pessimism and driven prices down by more than 30 percent since May, prompting hedge funds to cut bullish bets to a five-year low. Iran is joining leading members of OPEC in raising production while US crude stockpiles are almost 100 million barrels above the five-year seasonal average.
“The continued concern around Iran and the risk of a longer than expected re-balancing in the oil market is certainly increasing,” Australia & New Zealand Banking Group Ltd senior commodity strategist Daniel Hynes said by phone.
“Over the next month, we’ll see the end to the peak driving season in the US It doesn’t bode well for the fundamentals,” he said.
Brent for October settlement declined as much as US$1.46 to US$44 a barrel on the London-based ICE Futures Europe exchange and was at US$44.27 at 4:41pm Sydney time. The contract lost US$1.16 to US$45.46 on Friday. The European benchmark crude traded at a US$5.12 premium to West Texas Intermediate (WTI), the US marker grade.
WTI for October delivery decreased as much as US$1.45, or 3.6 percent, to US$39 a barrel on the New York Mercantile Exchange, the lowest intraday price since February 2009. Prices fell 4.8 percent through on Friday for an eighth weekly drop, the longest losing streak since 1986. Total volume was more than double the 100-day average.
Iran was OPEC’s second-largest producer before international penalties over its nuclear program began in mid-2012. The country is to seek to regain oil sales regardless of prices, Zanganeh said last month after negotiators reached a deal with world powers offering sanctions relief.
OPEC, which supplies about 40 percent of the world’s crude, has pumped above its quota of 30 million barrels a day for more than a year, according to data compiled by Bloomberg. Iran’s output trailed that of Saudi Arabia and Iraq last month.
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