OPEC Inaction Spurs Survival of Fittest as Oil Below $65 – Bloomberg.
West Texas Intermediate tumbled below $65 a barrel to the lowest level since July 2009 amid speculation prices have further to drop before OPEC’s decision to maintain output slows U.S. shale supply.
Benchmark futures in New York and London slumped as much as 3.7 percent, before paring some of those losses. Both grades had their biggest monthly loss in November in almost six years after the Organization of Petroleum Exporting Countries signaled it will leave it to the market to reduce a global glut. Current prices are no guarantee of a significant decline in U.S. shale output, Iran’s Oil Minister Bijan Namdar Zanganeh said in an interview on Nov. 28.
Oil has collapsed into a bear market as the U.S. pumps crude at the fastest rate in three decades while global demand growth slows. OPEC last week resisted calls from members including Venezuela and Iran to reduce its production target of 30 million barrels a day at a meeting in Vienna.
“The market is in panicking mode,” Hans van Cleef, energy economist at ABN Amro Bank NV in Amsterdam, said by phone. “Prices in 2015 will be significantly lower than in 2014.”
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