US Stocks fall as crude oil prices have hit a four-year low
US Stocks fall as crude oil prices have hit a four-year low after Saudi Arabia, the world’s largest exporter, unexpectedly cut the price of oil sold to them in a further sign of an escalating war for control of global energy markets. raising concerns about global demand.
Brent crude, a benchmark made of oil from 15 North Sea fields against which almost half the world’s petroleum is priced – fell 2.5pc to $82.62 a barrel in midday trading, dropping to its lowest level. This is the fourth straight session that crude has fallen, losing 6.8 percent over that period. It is down more than 30 percent from a recent closing peak.
Exxon Mobil Corp. and Chevron Corp. paced losses in energy shares as oil sank to as low as $75.84 a barrel in New York. Sprint tumbled 17 percent as the wireless carrier lost subscribers for an 11th straight quarter. Priceline slid 9.2 percent on a weaker-than-projected sales forecast.
Opec, of which Saudi is the leading member – has been losing market share to shale oil producers in the world’s largest economy with Nigeria recently dropping out of the list of member countries that supply North America.
At the same time, Opec members are producing too much crude to meet falling demand for the current market driving down prices further. According to estimates of the International Energy Agency, the call on Opec in the fourth quarter will total 30.3 million barrels per day, while next year it will fall to just 29.3 million barrels per day.
Pressure is on the 12-member cartel – which controls about a third of the world’s oil supply – to cut production at its next meeting on November 27. However, its leading producers led by Saudi appear to be willing to keep the spigots open in order to defend market share and cripple some of their major rivals.
Russia, which pumps over 10m barrels per day of crude, has been a major loser in the current oil price rout. Deutsche Bank now expects Russia’s economy to contract by 0.2pc next year, recovering slightly in 2016 to a moderate growth rate of 0.8pc. Russia’s main export blend Urals oil is priced off Brent, the benchmark for about half the world’s oil.
Opec is due to publish annual World Oil Outlook on Thursday which should provide further insight into its longer term planning to meet world energy market demand.