Crude Rebounds From Five-Year Low Amid Shale-Oil Spending Curbs

Brent and West Texas Intermediate rebounded from the lowest closing levels in more than five years amid signs that U.S. oil producers were curbing investment as price competition intensified between OPEC’s largest members.

Brent futures rose 1 percent in London, reversing an earlier loss of 1.4 percent. ConocoPhillips cut its spending for next year by about 20 percent yesterday, deferring investment in North American shale plays including the Permian and Niobrara. Iraq, the second-largest producer in the Organization of Petroleum Exporting Countries, reduced its Basrah Light crude price for January to the lowest in at least 11 years.

Crude is trading in a bear market as the highest U.S. production in three decades exacerbates a global glut. Saudi Arabia, which led OPEC’s decision to maintain rather than cut output at a Nov. 27 meeting, last week offered supplies to its Asian customers at the deepest discount in at least 14 years.

“U.S. producers are more focused on preserving profitability, while the Saudis and Iraq are interested in preserving market share,” Kash Kamal, an analyst at Sucden Financial Ltd. in London, said by phone. “Until we see an increase in demand outlook, it will be hard to pin down prices.”

Brent for January settlement climbed 67 cents to $66.86 a barrel on the London-based ICE Futures Europe exchange at 12:08 p.m. local time. It slid $2.88 to $66.19 yesterday, the lowest close since September 2009. The European benchmark crude traded at a premium of $3.04 to WTI. Prices are down 40 percent this year.

Read the Full Article

Back To Top
Close search
Search