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Oil futures fell 4% on Thursday, capping a volatile day of trading that saw the commodity swing by around $4 a barrel in either direction. Futures earlier found some support from a heightened appetite for assets viewed as risky. Comments from Saudi Arabia’s oil minister that the price drops were “temporary” seemed to be taken both as support and as a drag on prices. Light, sweet crude for delivery in January fell $2.36, or 4.2%, to settle at $54.11 a barrel on the New York Mercantile Exchange. That was oil’s lowest settlement since May 5, 2009. Futures traded as low as $54.05 and as high as $58.73 a barrel earlier. Brent oil for February delivery declined $1.91, or 3.1%, to finish at $59.27 a barrel on London’s ICE Futures exchange. That was Brent’s lowest settle value since May 19, 2009. “We are getting a reality check” after gains in the past two sessions, said Jim Ritterbusch, president of oil advisory firm Ritterbusch & Associates. Oil could trade for as low as $48 a barrel before the end of the year, before OPEC does anything to prevent further losses, Ritterbusch said.
But the cartel is likely to call a special meeting next year, Ritterbusch said. “They’d probably call uncle before U.S. producers do,” he said, implying that the cartel might ultimately concede to cutting its oil production. OPEC in late November decided to keep its production the same, a move viewed as a way to preserve its market share, rather than cut output to help put a floor on falling oil prices. Futures have plunged since then, and are off nearly 50% from a peak reached in June. Meanwhile, Saudi Arabia’s oil minister, Ali al-Naimi, called the slide in prices temporary and said global demand will improve, according to media reports. While some traders saw that as a message of support for crude futures, others took the comments as yet another negative. “They just highlighted that Saudi Arabia, and more broadly, OPEC, are maintaining their posture of targeting market share as opposed to defending prices,” said Matt Smith, an analyst with Schneider Electric.
U.A.E. says this won’t last: The United Arab Emirates’s energy minister, Suhail Mohamed Al-Mazrouei, echoed Al-Naimi and said the slide in oil prices won’t last for long and won’t affect the country’s economy, in remarks published Thursday,The Wall Street Journal said.