Hounded by a relentless rise in global supply that looks set to outpace demand again next year, Brent crude prices hit their lowest in over 11 years on Monday.
The price of crude is set for its largest monthly percentage decline in seven years with more barrels poised to enter the market from the likes of Iran, the United States and Libya and oil production running close to record highs.
Thousands of jobs and heavy cuts in spending have been witnessed at oil producers even as consumers have enjoyed lower fuel prices. The currencies of the world's richest exporters have been forced to be revalued, assets have been sold off and even debts have been issued for the first time in years as the countries struggle to repair the holes in their finances.
One example is Azerbaijan whose currency, manat, fell by 32 percent and it was forced to float the currency on Monday.
Even though every dollar lower in the oil price brings fresh pain to its poorer members, OPEC, led by Saudi Arabia, will stick with its year-old policy of compensating for lower prices with higher production, and shows no signs of wavering.
To clock the lowest price ever since July 2004, the price of Brent futures fell by about 2 percent to as low as $36.05 per barrel on Monday.
Noting the steepest fall since the collapse of failed U.S. bank Lehman Brothers in October 2008, Brent crude prices have dropped by nearly 19 percent this month.
U.S. crude futures dropped 31 cents to $34.42 a barrel, their lowest since 2009.
"With OPEC not in any mood to cut production ... it does mean you are not going to get any rebalancing any time soon," Energy Aspects chief oil analyst Amrita Sen said.
"Having said that, long-term of course, the lower prices are today, the rebalancing will become even stronger and steeper, because of the capex cutbacks ... but you're not going to see that until end-2016," she added.
Brent price could further take a drop to as little as $20 a barrel for supply to adjust to demand, believes investment bank Goldman Sachs.
Dealing a blow to economies of oil producers such as Nigeria, the price of oil has halved over the past year. While Nigeria faces its worst crisis in years another oil producing country Venezuela has been plunged into deep recession.
The wealthy Arab states have also not been spared. Interest rates were raised last week by Saudi Arabia, Kuwait and Bahrain, as they scrambled to protect their currencies.
"Really, I wouldn’t like to be in the shoes of an oil exporter getting into 2016. It's not exactly looking as if there is light at the end of the tunnel any time soon," Saxo Bank senior manager Ole Hansen said.
Russia now pumps oil at a post-Soviet high of over 10 million barrels per day (bpd), while OPEC output is close to record levels above 31.5 million bpd, reflecting the determination among the biggest producers to woo buyers at any cost.
(Source:www.reuters.com)
The price of crude is set for its largest monthly percentage decline in seven years with more barrels poised to enter the market from the likes of Iran, the United States and Libya and oil production running close to record highs.
Thousands of jobs and heavy cuts in spending have been witnessed at oil producers even as consumers have enjoyed lower fuel prices. The currencies of the world's richest exporters have been forced to be revalued, assets have been sold off and even debts have been issued for the first time in years as the countries struggle to repair the holes in their finances.
One example is Azerbaijan whose currency, manat, fell by 32 percent and it was forced to float the currency on Monday.
Even though every dollar lower in the oil price brings fresh pain to its poorer members, OPEC, led by Saudi Arabia, will stick with its year-old policy of compensating for lower prices with higher production, and shows no signs of wavering.
To clock the lowest price ever since July 2004, the price of Brent futures fell by about 2 percent to as low as $36.05 per barrel on Monday.
Noting the steepest fall since the collapse of failed U.S. bank Lehman Brothers in October 2008, Brent crude prices have dropped by nearly 19 percent this month.
U.S. crude futures dropped 31 cents to $34.42 a barrel, their lowest since 2009.
"With OPEC not in any mood to cut production ... it does mean you are not going to get any rebalancing any time soon," Energy Aspects chief oil analyst Amrita Sen said.
"Having said that, long-term of course, the lower prices are today, the rebalancing will become even stronger and steeper, because of the capex cutbacks ... but you're not going to see that until end-2016," she added.
Brent price could further take a drop to as little as $20 a barrel for supply to adjust to demand, believes investment bank Goldman Sachs.
Dealing a blow to economies of oil producers such as Nigeria, the price of oil has halved over the past year. While Nigeria faces its worst crisis in years another oil producing country Venezuela has been plunged into deep recession.
The wealthy Arab states have also not been spared. Interest rates were raised last week by Saudi Arabia, Kuwait and Bahrain, as they scrambled to protect their currencies.
"Really, I wouldn’t like to be in the shoes of an oil exporter getting into 2016. It's not exactly looking as if there is light at the end of the tunnel any time soon," Saxo Bank senior manager Ole Hansen said.
Russia now pumps oil at a post-Soviet high of over 10 million barrels per day (bpd), while OPEC output is close to record levels above 31.5 million bpd, reflecting the determination among the biggest producers to woo buyers at any cost.
(Source:www.reuters.com)
