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News, January 2015
UAE Oil Minister, Suhail Al-Mazroui Says Oil Prices Are Intentionally Down as a Message to Non-OPEC Producers That They Need to Be Rational
January 13, 2015
Brent crude tumbles more than 3 per cent, hits 6-year low
Crude variety fell as much as 48.20 per cent before trading 3.71 per cent lower
By Siddesh Suresh Mayenkar,
Dubai: Crude extended losses on Monday to hit its lowest level in six years, after Goldman Sachs joined Blackstone in cutting its price forecast.
Brent crude fell as much as 48.20 per cent, a low last seen in early 2009, before trading 3.71 per cent lower at $48.25 (Dh177) per barrel at 6pm.
Goldman Sachs cut its three-month forecast for Brent to $42 a barrel from $80 and for the US, and for West Texas Intermediate contract to $41 from $70 a barrel.
The world’s biggest money manager, Blackstone, expects crude oil to hit $40 in the first half of 2015.
“The negative outlook would remain in place until we see supply destruction. So far there has been no sign of that despite seeing another big cut in US rig count last week. The lack of bounce last week provided the market with a clear signal that selling pressure persists,” Ole S. Hansen, head of commodity strategy at Saxo Bank, told Gulf News from Copenhagen.
Crude oil shed more than 50 per cent of its value last year after Opec decided to maintain output to counter US shale gas. Meanwhile, hedge funds and money managers increased bullish exposure, especially in Brent crude, where hedge funds last week raised bullish bets by more than 21 per cent.
LONDON Tue Jan 13, 2015 5:46am EST
Brent and U.S. WTI crude oil prices fell to their lowest levels in almost six years on Tuesday as a big OPEC producer stood by the group's decision not to cut output to tackle a glut in the market.
Oil prices have fallen 60 percent from their June 2014 peaks, driven down by rising production, particularly U.S. shale oil, and weaker-than-expected demand in Europe and Asia.
Rather than cutting output to try to balance the market, producers from the Organization of the Petroleum Exporting Countries (OPEC) are offering discounts to customers in an attempt to defend market share.
At 1032 GMT, February Brent crude was down $1.06 at $46.37 a barrel, after dipping to $45.23, its lowest since March 2009.
U.S. crude for February was down $1.15 at $44.92 per barrel, off an intraday low of $44.21.
"The market is in a bit of a panic now and the momentum is really quite negative. We haven't seen any actions or comments that could reduce this aggressive selling," said Ole Hansen, senior commodity strategist at Saxo Bank.
On the contrary the United Arab Emirates' oil minister, Suhail bin Mohammed al-Mazroui, said on Tuesday that OPEC's November decision not to cut output had been the right one.
"The strategy will not change," he said. By not reducing output, "we are telling the market and other producers that they need to be rational".
Oil prices have fallen so far that the front-month February contract is now trading about $7 below the July contract, encouraging traders to hire tankers to store oil at sea.
"Once floating storage starts, there is very little support on the downside for Brent spreads," analysts at Energy Aspects said in a note.
Storage plays work when traders can buy cheap oil to sell at a higher price at a future date. Deflationary pressures are beginning to build in both Asian and European economies as demand remains weak. UK inflation dipped to a 14-year low in December.
The downward pressure on oil prices is so large that even record Chinese crude imports for December, above seven million barrels per day for the first time as the world's second largest oil consumer took advantage of low prices to build up its strategic reserves, could not lift the market for long.
Banks have slashed their oil price outlook, with analysts at Goldman Sachs cutting their average forecast for Brent in 2015 to $50.40 a barrel from $83.75.
UAE energy minister: No change in OPEC policy amid oil slide
Tuesday, January 13, 2015 5:48 am
ABU DHABI, United Arab Emirates (AP) —
The energy minister for the United Arab Emirates said Tuesday his country is concerned about the balance in the oil market but added that OPEC does not plan to shift its strategy to shore up falling crude prices.
Oil prices have lost well over half their value since late June, with benchmark U.S. prices now trading below $45 a barrel.
OPEC, a 12-member bloc that includes the Emirates, decided at its last meeting in November to keep its production levels unchanged. A decision to cut production could have helped boost prices — a move that would also benefit rivals including higher-cost producers benefiting from the U.S. oil-shale boom.
Emirati Energy Minister Suhail Bin Mohammed al-Mazroui suggested his country believes OPEC's move is still the right one despite the steep sell-off, and said the organization will likely wait until its next meeting in June before considering any change in strategy.
"We cannot continue just protecting a certain price," al-Mazroui said at an energy conference in the Emirati capital, Abu Dhabi.
He said the Emirates is "concerned about the balance of the market but we cannot under any circumstances be the only party that is responsible to balance the market."
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