Petroleum: Crude attempts to stabilize after its huge losses the previous day
London (awp / afp) – Oil prices fell slightly Friday in London in late European trading, attempting to stabilize day after a sharp fall caused by the decision of the Organization of Petroleum Exporting Countries (OPEC) not to cut production.
By 1700 GMT (1800 CET), the price of Brent North Sea for January delivery was worth 72.32 dollars on the Intercontinental Exchange (ICE) in London, down 26 cents from Thursday’s close. Around 6:45 GMT, the European benchmark crude tumbled to 71.12 dollars, a new low since July 7, 2010.
On the New York Mercantile Exchange (Nymex), a barrel of ” light sweet crude “(WTI) for the same period lost 5.20 dollars to 68.49 dollars compared to the last official closing Wednesday. But the course was able to recover slightly from its lowest level in electronic trading Thursday (67.75 dollars), public holiday in the United States during Thanksgiving.
” Oil prices have spent the day trying to consolidate after the huge losses the previous day “caused by the status quo of OPEC, explained analysts of GIs.
Although this decision was widely expected, crude prices have plummeted, marking new lows since 2010 and continuing a fall that began in early summer due to oversupply and weak demand growth.
“OPEC ministers have reluctantly accepted that the rules had changed and that their ability to influence the direction of world oil prices had been reduced by the shale oil revolution in the United States “explained Michael Hewson, analyst at CMC Markets.
” This seems to be a complete victory of the Saudis and their allies in the Persian Gulf “, felt his side Michael Wittner, analyst at Societe Generale. Unlike other members of OPEC, who openly campaigned for a decline in production, Saudi Arabia had been favorable to leave on market mechanisms.
If OPEC had decided to reduce its production, it would be back in a vicious circle where it would steadily reduced its offer to fight against falling prices meet the increase in US production, explained Mr Wittner. Saudi Arabia and its allies therefore simply decided not to “delay the inevitable” ie adjusting the level of production by the market price.
“The faster prices decline and slow or stop the growth of US production and other non-OPEC countries, the faster the market can rebalance and faster prices can recover in a sustainable way, “Mr Wittner deciphered.
“All eyes are now turning to US production and growth,” pointing and Jamal Orazbayeva, Westhouse analyst.
“For the new mechanism (adjustment by the market) to work, prices need to fall below the cost of production of US shale oil and remain there for a long time, “warned Mr Wittner, which assesses the key level at 65 dollars a barrel.
But” if Saudi Arabia and its Gulf allies, Kuwait and the UAE have sufficiently strong balance sheets to support low price for a long time, many other OPEC countries will be severely shaken by an economically falling oil revenues, “recalled Bhushan Bahree and Jamie Webster, experts IHS.
So, Venezuela, which has been hard hit by the fall in prices of crude over 35% since mid -June, said Thursday that he would continue to fight for a barrel of oil at $ 100
afp / rp
(AWP / 11.28.2014 6:31 p.m..)
(AWP / 11.28.2014 6:31 p.m.) ^ ->
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