|11-29-2014, 11:10 PM||#1|
Brent crude dips below $75 a barrel as OPEC maintains production limit
Brent crude oil traded below the $75-a-barrel market for the first time since August 2010 on Thursday after the Organization of the Petroleum Exporting Countries (OPEC) opted to leave output limits unchanged.
“As I told you before there is no cut,” Saudi Arabian Oil Minister Ali al-Naimi told reporters as he left OPEC’s ministerial meeting in Vienna.
January Brent crude oil fell as much as 4.4% to $74.36 per barrel, the lowest since August 31, 2010, and was last at $74.64 a barrel, down 32.58% for the year. As of 15:52 GMT
WTI crude oil for January delivery fell 3.88% to $70.82 a barrel on the NYMEX, the lowest since August 25, 2010.
OPEC kept its collective ceiling of 30 million barrels a day after the 12-member cartel convened in its Vienna headquarters.
The Saudi-orchestrated price war is on then, and OPEC is ready to fight against the Canadian oil sands and the U.S. shale boom.
The cheap price of oil helps producers of Saudi Arabia compete better against the U.S.
Prices are now traded at a level that makes production unprofitable for several companies in high cost locations in the U.S.
Also, the massive foreign reserves of Saudi Arabia and some OPEC members will help them withstand the decline in oil prices, although some members like Kuwait, Iran and Oman have already started adjusting their budgets for the oil-driven deficit.
But also, lower oil prices will discourage some of the U.S. producers to scale back or even stop their production of shale oil.
Middle East exporters seem more than willing to defend their market share and even as they will lose a lot of money from lower oil prices, it will be meager when compared to U.S. shale, which is more expensive to produce.
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