Oil declined to the lowest level since 2008 in London amid estimates that OPEC’s decision to scrap production limits will keep the market oversupplied.
Brent futures declined as much as 3 percent for a sixth consecutive loss. The global surplus will persist at least until late 2016 as demand growth slows and the Organization of Petroleum Exporting Countries shows “renewed determination” to maximize production, the International Energy Agency said Friday. The group chose not to curb output at its Dec. 4 meeting.
Oil prices have slumped to levels not seen since the global financial crisis as a result of OPEC’s strategy to defend market share against higher-cost producers. The group’s production rose to a three-year high in November, it said in a report Thursday, as surging Iraqi volumes more than offset a slight pullback by Saudi Arabia.
“The hits keep on coming,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund. “It was bad enough that the OPEC meeting ended in disarray with no quota. Now we’re seeing just how aggressively everyone is fighting for market share.” Read more