Another bad night of trading for oil prices, with US oil sliding under $US75 a barrel for the first time in four years and the key Brent price in London dropping even further under the $US80 a barrel mark.
The immediate catalysts were larger than expected US oil stocks figures and those comments from Saudi Arabia’s oil minister Saudi Arabian Oil Minister Ali al-Naimi who said he sees no “price war.”
In New York, US light crude (West Texas Intermediate) for delivery in December first fell $US1.90, or 2.5%, to $US75.28 a barrel. Prices then dropped further to around $US74.30 to be down 3.7% on the day in early Asian trading this morning.
Gold prices didn’t move, the US dollar traded in a narrow range (leaving the Aussie dollar above 87 US cents at 87.20 just after 7am today, a sign the greenback hasn’t been strong overnight).
In London, December Brent crude fell $US2.46, or 3%, to $US78.66 a barrel, trading around the lowest level since September 2010.
Saudi Arabian Oil Minister Ali al-Naimi said on Wednesday at an oil conference in Mexico that he sees no “price war” and that his country’s oil policy has been constant and has not changed.
Talk of a price war is a sign of misunderstanding – deliberate or otherwise – "has no basis in reality,” he was quoted as saying.
Overnight, the US Energy Information Administration said American oil supplies fell by 1.7 million barrels in the week ended November 7. Markets had expected a fall of half a million barrels. Normally that’s a minor even, but in the current febrile atmosphere in oil markets the bigger than expected fall was not good news.
The fall will again hit the local stockmarket, as it did yesterday when it suffered its fourth fall in a row.
The ASX 200 dropped 20.4 points, or 0.4% to 5442.7. The All Ordinaries shed 19.5 points, or 0.4%, to 5423.5.
Naturally energy companies struggled with Santos losing 2.3% to $12.17, Origin Energy 2.1% to $13.63 and Oil Search also dropped 2.1% to $8.35.
But Woodside shares were treated far more kindly by investors and they only fell 13 cents to just over $40.
