Brent crude oil slides to lowest price since 2010

Brent oil prices fell more than $2 a barrel to less than $88 US on Monday, its lowest since 2010, after key Middle East producers signalled they would keep output high even if that meant lower prices.

Brent oil prices have tanked by nearly 25 per cent since June as ample supply coincided with weak demand, raising the possibility that the Organization of the Petroleum Exporting countries could cut output.

But Saudi Arabia has privately told oil market participants it can accept oil prices between $80 and $90 a barrel, sources briefed by OPEC’s biggest producer told Reuters.

Kuwait’s oil minister said on Sunday OPEC was unlikely to cut production to support prices. OPEC is due to discuss output at its next meeting Nov. 27.

“It suggests there’s some nervousness in the market that Saudis are seeking to bring pressure on the shale producers in the U.S.,” said Gene McGillian, an analyst at Tradition Energy.

“The market is in search of a bottom and we’re in the process of finding it, we just have to see what OPEC does and where the economy goes,” McGillian said.

Early on Monday, Brent crude touched its lowest since December 2010 at $87.74. But Brent pared losses, trading down $1.53 on the day at $88.68 by 1:53 ET (1753 GMT). U.S. crude was down $0.41 at $85.41.

The narrower losses were a result of the market “taking a breather” from the rally, said John Saucer, vice president of research and analysis at Mobius Risk Group. “In the near term, I think we need to see some consolidation, some backing and filling,” he said. The market may be locked in a holding pattern until the IEA numbers, which are due out early Tuesday.

Growth in China’s exports and imports trumped forecasts in September, and the world’s largest energy consumer increased crude oil imports by 9.5 percent from August, lending limited support to prices.

Consuming countries like China and India often build up stockpiles when prices are low.

Prices could slide another $10 or more

Oil prices could be on the brink of sliding another $10 or more, some analysts said. They say a drop of over 20 per cent since June has wiped out key support levels and left behind a “technical graveyard”.

Iraq cut its November oil prices for customers in Asia and Europe on Sunday, following a similar move by Saudi Arabia last week.

Kuwait’s oil minister, Ali al-Omair, was quoted as saying by state news agency KUNA on Sunday that $76 to $77 a barrel might be the level that would end the oil price slide, since that was the cost of oil production in the United States and Russia.

“We’ve realy accelerated on the downside this month, it’s too early to tell where we’re going,” said Saucer, but he said the sell-rally is still the overriding mood.

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