U.S. oil price falls amid ample supplies

Oil prices could plunge to the lows of mid-$20s a barrel next year if OPEC doesn’t change its policy to stabilize the market, said Venezuelan Oil Minister Eulogio Del Pino. While a few discount the measure’s usefulness, others in the market use it as a gauge of how production might rise or fall in the future. Various reports say the bloc plans to maintain the same policy despite protests by the less cash-rich smaller players.

US crude’s West Texas Intermediate (WTI) futures were quoted 3 cents higher at $40.57 a barrel after settling down 21 cents at $40.54 on the previous session $44.18 a barrel.

Benchmark front-month Brent futures for January fell 47c, or 1.05%, to $44.19 a barrel, recovering from a session-low of $44.04. The Organization of Petroleum Exporting Countries should make room for increased Iranian crude production within its ceiling of 30 million barrels a day, the nation’s Oil Minister Bijan Namdar Zanganeh said.

Brent oil futures rose about 1 per cent on Friday while USA crude fell nearly 1 per cent, struggling to stay above $40 a barrel, as worries about large stockpiles pressured its spot contract ahead of expiry.

“The market is tired from having looked at the production statistics and the ever increasing supply glut”, said Sucden analyst Kash Kamal. Prices have slumped 40 percent since OPEC embarked on a strategy last November to keep pumping and drive out higher-cost competitors such as USA shale companies.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell as much as 0.70% to an intraday low of 98.80, before moving back above 99 in USA afternoon trading.

This week, analysts will be taking cues from US economic indicators such as manufacturing data, weekly jobless claims, and a forecast for third-quarter gross domestic product.

China has become a battleground for oil producers who are seeking to defend sales amid a worldwide oversupply.

“ETF investors continue to find the temptation to call a bottom in oil too strong to resist”, said Eric Balchunas, a Bloomberg Intelligence analyst.

The bank noted the spread between near-month futures and December 2016 contract prices has hit a new record of almost $8 a barrel. Russia, which isn’t a member of OPEC, is facing competition in Europe after Saudi Arabia reduced pricing for buyers in northwest Europe and started selling in established Russian markets such as Poland.