The weakness in global oil prices took Brent crude, the so-called global marker crude type, to under $US80 a barrel for the first time in more than four years this morning.
But gold prices – the other commodity in the gun at the moment – hardly moved, dipping $US5 to $US1,158 an ounce, still above the year low of $US1,142 an ounce hit last Thursday in New York.
Brent sank more than 2% to $US79.98 early this morning, Sydney time, while US West Texas type crude sank 1.4% to around $US76.83.
US crude prices fell under $US80 a barrel and Brent breached that level this morning after OPEC again made it clear there would be no production cuts agreed to at the organisation’s meeting on November 27.
Oil fell despite a weakening in the US dollar which saw the Aussie currency regain and remain over the 87 US cent level this morning.
On its monthly oil market report, OPEC said its production in October dropped by 230,000 barrels of oil a day to 30.25 million barrels a day, with production falls reported from Saudi Arabia, Angola, and Nigeria. Libyan production rose. Normally that would have pushed prices higher.
But crude output from countries that do not belong to OPEC, however, rose by 250,000 barrels of oil a day.
The share of OPEC crude oil production in the global output eased to 32.7%, compared with 33% in September.
Brent crude was last at these levels in September-October of 2010 and is down now for five months in a row.
The market was more interested in comments from Saudi Arabia’s oil minister, Ali al-Naimi on the current state of the oil market. At an oil conference in Mexico he kept quiet on whether the Saudi’s would cut production because of the slide in prices, but gave a clue to official thinking when he reportedly dismissed claims Saudi Arabia had triggered a price war.
US consumers (drivers and industry) are a major beneficiary of the fall in oil prices, so is China, which has been allowing its currency to rise with the appreciating US currency.
