Oil Sinks to Lowest in Almost 7 Years

Monday, 14 December 2015

Oil extended declines from the lowest price since February 2009 as Iran pledged to boost crude exports, bolstering speculation OPEC members will exacerbate the global oversupply.

 

Futures dropped as much as 1 percent in New York after losing almost 11 percent last week, the most in a year. There’s “absolutely no chance” Iran will delay its plan to increase shipments even as prices decline, said Amir Hossein Zamaninia, the deputy oil minister for international and commerce affairs. Hedge funds and other large speculators raised bearish bets to an all-time high, U.S. Commodity Futures Trading Commission data showed.

Oil has slumped to levels last seen during the global financial crisis as the Organization of Petroleum Exporting Countries effectively abandoned production limits to defend market share, fueling a record surplus. The glut will persist at least until late 2016 as demand growth slows and OPEC shows “renewed determination” to maximize output, according to the International Energy Agency.

“The price war will likely drag on until the end of next year,” Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul, said by phone. “Saudi Arabia won’t be able to cut its production while Iran continues to increase output.”

WTI for January delivery fell as much as 35 cents to $35.27 a barrel on the New York Mercantile Exchange and was at $35.51 at 3:35 p.m. Singapore time. The contract decreased $1.14 to $35.62 on Friday, the lowest settlement since February 2009. The volume of all futures traded was more than six times the 100-day average.

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