USA oil plunges over 3 per cent on strong dollar, supply glut

“The main players in the petroleum market must certainly reach an agreement about the levels of production”, Algerian Prime Minister Abdelmalek Sellal said.

“Crude oil appears to find a few bottom at current levels, although it will find it hard to break higher as bears are clearly waiting in the folds to knock it lower each time there is a rally”, he said.

Saudi Arabia has previously said it is willing to cooperate with other oil producers to maintain oil price stability, but the comments on Monday arrived as futures prices were barely holding above 2-1/2 month lows.

The world’s largest crude producer has been pumping record amounts of oil as OPEC concentrates on defending market share. “The principles of OPEC were to act on the price of the crude oil, and we need to go back to the principles of OPEC”.

Oil has slumped about 46 percent the past year amid speculation a global glut will persist as OPEC continues to pump above its collective quota. The volume of all futures traded was about 93 per cent above the 100-day average.

West Texas Intermediate, the USA benchmark price for crude oil, was down 1.5 percent for the January contract to fall below the psychological $40-per-barrel threshold for the second time this week. The rebound soon lost steam, however, as analysts noted the remarks were in line with previous Saudi statements.

The active oil rig count fell by 10 to 564 this week, according to data compiled by Baker Hughes.

December WTI futures, which expire today, added 32 cents to $40.86 a barrel at 1:01 p.m. Friday on the NY Mercantile Exchange.

Brent crude oil futures edged higher on Friday but were still trading near three-month lows as the pressure of a persistent supply glut weighed on prices.

January contract had fallen $1.16, or 2.77 per cent, to $40.74 a barrel by 0740 GMT. The European benchmark crude ended the session at a premium of US$3.08 to WTI.

“It’s hard to see what else moved the price besides the Saudi statement, even though it’s exactly what Oil Minister al- Naimi said last week”, said Giovanni Staunovo, an analyst at UBS in Zurich.

The break in USA crude futures below US$40 a barrel exacerbated the pace of the selling, CMC’s Lawler said.

Energy traders continued to digest a modest build in US crude stockpiles last week after the U.S. Energy Information Administration (EIA) reported an increase of 0.3 million barrels on Wednesday for the week ending on November 13.