mmaviator

NEW YORK (Reuters) – Oil plunged more than 9 percent to below $50 a barrel on Monday after OPEC deferred a decision on new supply cuts at a meeting over the weekend.

The producer group delayed a decision on output until later this month as Saudi Arabia and other Gulf members called for greater compliance with existing cuts agreed to since September to help stem oil's fall from highs over $147 a barrel struck in July.

U.S. crude traded down $4.95 at $49.48 a barrel by 2:26 p.m. EST, while London Brent crude fell $5.41 to $48.08 a barrel.

"The major motivation for sellers is the discounting of the OPEC decision ... but motivation is not hard to find (as) the elements propelling prices from 2003 on have largely dissipated," said Mike Fitzpatrick, vice president at MF Global, in a report.

Surging demand from emerging economies sent oil and other commodities on a six-year rally, but prices have tumbled since July as the economic crisis erodes demand in the United States and other big developed consumer nations.

Federal Reserve Chairman Ben Bernanke warned on Monday that the U.S. economy remained under considerable strain and said policy-makers must be ready to take decisive action to protect jobs and growth.

U.S. stocks extended losses on Monday after manufacturing data showing factory activity fell in November to its weakest level since the 1981-1982 recession increased worries about the world economic slump.

"The OPEC meeting last weekend shows you that there's not a lot the group can do to stop the free-fall in oil prices. On top of that, the latest U.S. manufacturing data is playing into the market psychology," said Phil Flynn, analyst for Alaron Trading in Chicago.

"The weakness in the manufacturing sector foretells a bad demand picture for oil."

OPEC's secretary general said the cartel is ready to cut production by a significant amount when the group next meets on December 17 in Algeria.
"We are all geared toward a cut in Algeria," Abdullah al-Badri told a news conference in Tehran, two days after the group's meeting in Cairo.
"The market is oversupplied because we are seeing stocks as very high, about 55 to 56 days," he told reporters earlier.

Saudi Arabian Oil Minister Ali al-Naimi told Saudi-owned al-Hayat newspaper that OPEC would not need to make a further cut in oil supply when it meets in Algeria if producers comply with previous curbs and fuel stocks decline.

The group has agreed to trim 2 million barrels per day (bpd) from production since September.

Saudi Arabia over the weekend said $75 a barrel would be a "fair" price for oil, the first time in years that the world's biggest exporter has identified a target for crude prices.

"I believe $75 is the price for the marginal producer," Naimi told reporters in Cairo.

(Reporting by Matthew Robinson, Rebekah Kebede and Gene Ramos in New York, Jane Merriman in London, Maryelle Demongeot in Singapore and Osamu Tsukimori on Tokyo; Editing by Jim Marshall)

Oil drops 9 percent to below $50 as OPEC defers cuts - Yahoo! News


So are they going to start the climb back uphill on price since they will start cutting supply?

CPOonfinal

Not to $75. I suspect it'll hang in the upper 50's low 60's. The world markets are too weak and won't tolerate $75 oil.

socal swede

Being that demand is dwindling they can easily cut production without price jump. They already cut and prices still dropped.

And besides that we are saving some money compared to before, the best part is we are not feeding our enemies with billions of excess money anymore.

Just hope that we continue to work on alternatives to oil so we eventually can be self sufficient on energy. We have already been stuck on stupid too long.

Pilotpip

The stupidity that followed oil futures the last two years is gone. People aren't buying the "a tropical storm caused a drill to be shut down for six hours and some rebels in a third world country sabotaged a pipeline that was providing 0.001% of the world's oil" hype. OPEC doesn't have a ton of power in the big picture as more African and South American countries provide a significant amount of the world's oil supply.

You also will begin to see an increase in alternatives now that development is in full swing. While we still need it, another spike in oil prices will only hasten the R&D to bring these technologies to the consumer.

Cubdriver

Yeah that's the bad thing about the current batch of low oil prices... give us some slack and back to gas guzzlers we go again. I found myself eyeing a BMW 5-series again the other day and had to wash my face with cold water.

ryan1234

hopefully we can take a rational approach into this switching energy business and not just jump into something that could potentially cost us more than oil.



Wonder if the airlines are still concerned about stopping oil speculation!?!?!?!?
They are certainly enjoying this almost artificial deflation in prices....

jungle

Airlines are major oil speculators. If they hope to turn a profit.

So, shouldn't the speculators that drove the price up now be given the credit for driving it down?

mmaviator

The Swedish Minister for Sustainable Development, Mona Sahlin, has announced plans to break the country's dependence on oil by 2020.

Sweden: We will break dependence on oil by 2020


I KNOW THIS COUNTRY IS ALOT BIGGER BUT ATLEAST SWEDEN IS WORKING ON A GOAL/DEADLINE. THERE IS MORE TO SWEDEN THEN JUST THIS OIL CUT OFF, THEY ARE ALSO CUTTING CORNERS ON A LOT OF ENERGY CONSUMING PRODUCTS(FROM LIGHT BULBS TO CARS).