Oil hits 11-year low; Saudi-Iran tensions wipe out possibility of production cut

By FXStreet FXStreet (Mumbai) – Oil woe continues in the current year as Brent crude fell below $35 a barrel for the first time in 11 years yesterday. Brent crude sank by 4.2% to $34.88 a barrel, surpassing its late December fall, and taking the price to its lowest level since 1 July 2004. The price of US crude dropped 3.3% to $34.77 a barrel. Oil further dropped today hitting $32.62 a barrel on rising US stockpiles and devaluation of the Chinese yuan. US WTI was down 3.9%, the lowest since the $32.40 level touched in December 2008. Oil price had rallied briefly on Monday following supply concern which was primarily the result of the Saudi-Iran face-off.

Oil prices are currently 70% lower in value than the peak touched in June 2014. International Energy Agency said the oil price plunge since June 2014 that has reduced OPEC revenue by nearly $500 billion a year is the result of excessive pumping. Disregarding the global oil glut, The OPEC decided to increase its collective output ceiling to 31.5 million barrels per day (bpd) from the previous 30 million at the Vienna meeting on December 4th.

The rising inventory in the US brings in more bad news …read more

Source:: FX Street