Oil price war hots up

London: Brent crude oil fell to a more than four-year low near $82 a barrel on Tuesday, after top oil exporter Saudi Arabia cut sales prices to the United States.Front-month Brent crude touched a low of $82.08, its weakest since October 2010, and was down $2.10 at $82.68 a barrel by 10.30 am GMT (4 pm IST). US light crude was down $2.20 at $76.58 a barrel. It touched a session low of $75.84, its weakest since October 2011, as its discount to Brent hovered around $6.

 

The Brent price plunged more than 50 cents below last month’s low of $82.60 before recovering.“We’ve been seeing some technical stop loss selling because the price has reached new lows,” said Christopher Bellew, a broker at Jefferies in London. The world’s top exporter increased its December sales prices, relative to benchmarks, to Asia and Europe on Monday, but lowered prices to the US, a smaller export market.

 

“This is mixed news, and the fact that the positive angle has not made an impact shows that market sentiment is very negative at the moment,” said Eugen Weinberg, head of commodities res-earch at Commerzbank in Frankfurt.Daniel Ang of Phillip Futures said in a note that the move “signalled Saudi Arabia’s intention to fight for US share and could even show its intention to squeeze US shale producers”.

 

But analysts at JBC Energy wrote that the pricing reflected market fundamentals and did not have a political motive.“We would strongly advocate against interpreting every month’s OSP publication in the context of ‘price war’ and ‘market share battle’ stories,” they said in a note. The absence of signs that the Opec could curb output in a well supplied market also continued to weigh on sentiment.

 

The oil cartel will meet on November 27 in Vienna to discuss its output targets for next year. Members Venezuela and Ecuador are working on a joint proposal to defend oil prices, but the UAE oil minister said that the group is “not panicking.”Opec’s secretary general last week said next year output would not vary much from 2014, and Iran and Kuwait have said a cut in output at the next meeting was unlikely.