U.S. oil prices briefly dipped below $80 a barrel Thursday on reports that the Organization of the Petroleum Exporting Countries is increasingly unlikely to cut its production despite high global supplies and weak prices.
Persian Gulf nations including Saudi Arabia, Kuwait and the United Arab Emirates are set to oppose any cut to OPEC's oil-production ceiling at next month's meeting despite the continuing fall in global oil prices, according to several people familiar with the situation.
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Both the U.S. and global oil contracts fell on the news.
The price drop comes amid broad concerns about slowing global growth, which have sent global markets plunging as investors pile into safe-haven assets.
Light, sweet crude for November delivery dipped as low as $79.78 a barrel on the New York Mercantile Exchange, the lowest intraday level since June 2012, before paring some losses. The contract recently traded down $1.47, or 1.8%, at $80.31 a barrel.
Brent fell as low as $82.60 a barrel on ICE Futures Europe, a near-four-year intraday low. Prices recently traded down $1.02, or 1.2%, at $82.76 a barrel.
Prices have plunged in the last four months as ample global supplies have flooded the market and demand has been moderate.
But Gulf nations fear any lowering of the limit on the amount that can be produced by the OPEC would lead to members of the cartel losing share in global oil markets.
"Most oil-market participants remain primarily focused on, will OPEC cut production or wait it out until prices drop to a level where non-OPEC producers cut production?" said Dominick Chirichella, analyst at the Energy Management Institute, in a note. "The overwhelming market view is oil-demand growth will continue to be lackluster for the next year or so."
Several OPEC nations, including Saudi Arabia and Kuwait, have cut their official selling prices for November, indicating a willingness to maintain market share in the current low-price environment.
Another Gulf official said U.S. oil prices could fall to around $70 a barrel before substantial quantities of U.S. shale oil production become uneconomical--suggesting that some in OPEC expect prices to fall further.
Citigroup analysts said in a note Thursday that even at $75 a barrel for U.S. prices, U.S. shale production would only slow down. "To take out enough new production to flatten production growth might require prices in the $50 range short-term," the analysts said.
OPEC is due to hold its next meeting on Nov. 27 in Vienna.
In the U.S., traders are waiting for weekly inventory data from the Energy Information Administration, which is due to be released Thursday at 11 a.m. EDT.
Analysts expect the agency to report that oil supplies rose by 2.2 million barrels in the week ended Oct. 10, according to a Wall Street Journal survey. Analysts also expect the report to show that gasoline supplies fell by 1.4 million barrels and distillate stocks fell 1.7 million barrels.
The American Petroleum Institute, an industry group, said late Wednesday that its own data for the same week showed a 10.2-million-barrel build in crude stocks, a 3.1-million-barrel draw from gasoline inventories and a 200,000-barrel drop in distillate supplies.
November reformulated gasoline blendstock, or RBOB, recently fell 1.27 cents, or 0.6%, to $2.1360 a gallon.
November diesel fell 2.89 cents, or 1.2%, to $2.4297 a gallon.
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