West Texas Intermediate and Brent oil extended losses to the lowest in four years amid signs that OPEC remains unwilling to reduce output to ease a supply glut.
Speculation of a price war within OPEC "has no basis in reality," Saudi Oil Minister Ali Al-Naimi said yesterday. Slumping oil prices reflect a growing consensus among traders and investors that OPEC will maintain output, Goldman Sachs Group Inc. said. Inventories at Cushing, Oklahoma, the delivery point for U.S. oil futures, rose to the highest since May.
"There is a feeling of oversupply," said Michael Hiley, head of energy OTC at LPS Partners Inc. in New York. "The Saudis haven't said whether they are going to cut or not. There is a bearish feeling in the market and we got another wave of selling after the inventory numbers."
WTI for December delivery declined $2.97, or 3.9 percent, to $74.21 a barrel on the New York Mercantile Exchange, the lowest settlement since Sept. 21, 2010. The volume of all futures was 46 percent above the 100-day average.
Brent for December settlement, which expires today, dropped $2.46, or 3.1 percent, to $77.92 a barrel on the London-based ICE Futures Europe exchange, the lowest level since Sept. 9, 2010. The more active January contract was down $3.63 at $77.49. Volume was 15 percent above the 100-day average.
Bear Market
Gasoline futures slumped 5 percent to $2.0016 a gallon on the Nymex, the lowest since September 2010. Regular retail gasoline averaged $2.917 a gallon nationwide yesterday, the lowest since December 2010, according to AAA.
Oil sank into a bear market last month as leading OPEC members resisted calls to cut production and instead reduced export prices to the U.S., where output has climbed to the highest level in more than three decades. Venezuela, Libya and Ecuador have asked for action to prevent crude from falling farther. The group is scheduled to meet Nov. 27 in Vienna.
"Saudi oil policy has remained constant for the past few decades and it has not changed today," Al-Naimi said at a conference in Acapulco, Mexico, in his first public comments since crude plunged into a bear market. "We want stable oil markets and steady prices, because this is good for producers, consumers and investors."
Saudi Arabia's production slid 69,900 barrels a day to a seven-month low of 9.603 million in October, OPEC said in its monthly report yesterday. The 12-member group, which supplies about 40 percent of the world's oil, pumped 30.253 million barrels a day, OPEC said, citing data based on estimates from sources including analysts and media organizations. That exceeds its collective target of 30 million set in January 2012.
OPEC Meeting
"People recognize that you're unlikely to see a cut in this Nov. 27 OPEC meeting," and that's pushed prices lower in the last several days, Jeff Currie, head of commodities research at Goldman Sachs Group Inc. in New York, said today in an interview on Bloomberg Television's "On the Move" with Jonathan Ferro. "When we look at U.S. shale production, it is continuing to surprise to the upside."
Crude supplies at Cushing climbed 1.7 million barrels to 22.5 million last week, the Energy Information Administration said. U.S. crude stockpiles decreased 1.74 million barrels, according to the EIA, the Energy Department's statistical arm.
Gasoline inventories rose 1.81 million to 203.6 million. Distillates dropped 2.8 million to 116.9 million, the lowest since May. U.S. refineries operated at 90.1 percent of their capacity, up from 88.4 percent the previous week.
"The market is looking for any signs of OPEC production cuts but it doesn't look like Naimi is in a hurry to do that," said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. "The market is just testing OPEC's resolve. It's full speed ahead until something changes."