Oil
futures plunged further on Monday to mark their lowest settlements in
nearly 7 years, in the aftermath of the decision by the Organization of
the Petroleum Exporting Countries last week to keep crude production
running at current levels.
January
West Texas Intermediate crude dropped $2.32, or 5.8%, to settle at
$37.65 a barrel on the New York Mercantile Exchange. That was the
largest one-day percentage loss since September.
January Brent crude fell $2.27, or 5.3%, to end at $40.73 a barrel on London’s ICE Futures exchange.
WTI
and Brent prices, which each lost about 4.2% last week, haven’t settled
at levels this low since February 2009, based on the most-active
contracts.
On
Friday, WTI crude settled 2.7% lower while Brent futures lost 1.9%
after OPEC, at its meeting in Vienna, agreed to maintain a ceiling that
reflects “current actual production” even as the market struggles with
oversupply.
OPEC
previously had a production ceiling of 30 million barrels a day, but
members have been producing closer to 31.5 million barrels a day,
according to market estimates. Analysts have concluded that the decision
essentially legitimizes the cartel’s overproduction.
Still,
the low prices do seem to be having an impact on production. Monthly
data released Monday by the U.S. government showed that domestic
shale-oil output is expected to fall by 116,000 barrels a day to 4.861
million barrels a day in January.
Source: MarketWatch
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