Crude prices at a four-year low as OPEC production cut unlikely

Singapore: Oil prices fell to four-year lows on Thursday as it appeared unlikely producer club OPEC would decide to cut output in support of prices at a meeting this week, and as increasing Chinese and US stocks boosted available supplies.

The Gulf producers within the Organization of the Petroleum Exporting Countries (OPEC) - Saudi Arabia, Kuwait, Qatar and the United Arab Emirates - said on Wednesday that they will not propose an output cut during the official meeting on Thursday, reducing the likelihood of joint action by OPEC to prop up prices that have sunk by a third since June.

Benchmark Brent futures dropped over $1 in Asian morning trading on Thursday to a low of $76.28 a barrel, their lowest level since September 2010, and US (Nymex) crude was also down over $1 to a session low of $72.61 a barrel.

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Following the sharp falls, both contracts recovered slightly to $76.56 and $72.80 a barrel respectively at 02:53 GMT.

“Crude oil prices declined… Saudi Arabia for the first time provided a firmer stance on their view on cutting production, indicating they believe the oil market will stabilise itself,” ANZ bank said in a morning note on Thursday.

“This comes as crude oil inventories in the USA rose for the second week, increasing by 1.9 million barrels, according to EIA,” it added.

In China, the government has quietly increased its strategic petroleum reserves (SPR) to around 30 days’ worth of imports, double the amount its official plan has revealed, as the world’s top energy consumer takes advantage of a dive in prices to strengthen its position in the global oil market.

Reuters