Oil Prices Hit US$34 a Barrel
Oil prices extended its recent losses on Friday, notching its biggest weekly loss since the 1991 Persian Gulf War, as rising fuel inventories in the US heightened concerns over slumping energy demand. The January futures contract fell below US$34 per barrel, as fears about a deepening global recession offset the proposed production cuts by OPEC.
US light crude for January delivery, which expired on Friday, settled down US$2.35, or 6.5%, at US$33.87 a barrel on the New York Mercantile Exchange, the lowest settlement since Feb. 10, 2004 when it ended at the same level.
The more active February contract settled up 69 cents at US$42.36 a barrel.London Brent crude gained 64 cents, settling at US$44.00.
Oil futures declined 27% since Dec. 12, the biggest weekly drop since January 1991. Crude oil is down more than US$100 from their peak of US$147 reached in July, as the global economic slump has dented global oil demand.
Supplies at Cushing, where oil that is traded in New York is stored, rose 21% to 27.5mn barrels last week, the highest since May 2007, the Energy Department said on Dec. 17. Crude inventories in Cushing may increase to full capacity within 2-3 weeks, Barclays said.
The Organization of Petroleum Exporting Countries (OPEC), which pumps 40% of the world’s oil, agreed on Dec. 17 to cut output by 2.46mn barrels a day starting Jan. 1 in an effort to bolster prices.
OPEC may meet again in Kuwait on Jan. 19 to discuss further production cuts, Chakib Khelil, the president of the group, recently said. OPEC will continue reducing output as demand falls.
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