1. Skip to content
  2. Skip to main menu
  3. Skip to more DW sites

Oil price hits 4-year low

October 13, 2014

Abundant supplies and weak demand have driven global oil prices to levels not seen since 2010. The slump was accelerated by comments from a key oil nation to keep output stable even if it means prices dropping further.

https://p.dw.com/p/1DV8s
The Punta Cardon oil refinery
Image: dpa/Bildarchiv

Prices for Brent oil fell about $2 (1.57 euros) on Monday, hitting their lowest since December 2010. The decline marked a 25-percent drop in the North Sea crude since June this year, and came as a result of ample supply and weak global demand.

Contracts for US benchmark West Texas Intermediate (WTI) for November delivery also lost substantially, with prices slumping by more than a dollar to about $84.

Gene McGillan, analyst with Tradition Energy, told the news agency Reuters that the market was "in search of a bottom" ahead of the next meeting of the Organization of Petroleum Exporting Countries (OPEC) on Nov. 27.

At the meeting, the world's top oil producers are to discuss future output amid a series of price cuts launched by some of the group's members. Just on Sunday, Iraq cut its November prices for customers in Asia and Europe, following a similar move by Saudi Arabia last week.

On the same day, Kuwait's oil minister was quoted as saying that he expected a level of $76 to $77 per barrel would end the price slide.

Analysts have said oil prices lower than that would render the production of OPEC rivals Russia and the United States unprofitable.

"OPEC countries appear to be more interested in defending their market shares at present than stabilizing prices," Germany's Commerzbank said in a research note to clients on Monday.

Saudi output signal weighs

Nervousness in the market was heightened on Monday after Saudi Arabia reportedly told market participants on Monday that it could accept prices between $80 and $90 for an "extended period."

Reuters quoted participants in a meeting between Saudi officials and investors as saying the kingdom was prepared to tolerate lower prices for as long as a year or two without taking action. Asked about impending output curbs, a Saudi official reportedly responded by saying, "What cuts?," according to Reuters.

Oil analysts believe the remarks were the clearest signs yet that the world's biggest oil producer is halting - at least temporarily - its longstanding goal of keeping the oil price at around $100. Apparently, they said, Saudi Arabia hopes lower oil prices will curb new investment and further increases in supply from US shale oil producers and other rising competitors on the world market.

uhe/cjc (Reuters, AFP, AP)