Oil fell to the lowest in almost six years on speculation the death of King Abdullah of Saudi Arabia won’t signal any change in strategy for the world’s largest crude exporter, Bloomberg said.
U.S. benchmark oil futures slid 1.6 percent, reversing an initial gain of as much as 3.1 percent. Salman Bin Abdulaziz Al Saud, who succeeds Abdullah on the throne, said he would maintain his predecessor’s policies, the report said.
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The kingdom will not cut production to boost prices because other producers would fill in the gap, Saudi Prince Alwaleed Bin Talal Al Saud said. U.S. crude inventories rose the most since 2001 last week, according to a government report on Thursday, Bloomberg said.
“There already has been a pretty well established succession plan so it’s not a big deal, ” said Kyle Cooper, director of commodities research at IAF Advisors in Houston, according to the report. “Supply has been very stout and demand’s not been what people had expected. It highlights the bearish sentiment in the market.”
Oil has slumped about 36 percent since the Organization of Petroleum Exporting Countries’ Nov. 27 accord to maintain production at 30 million barrels a day amid a glut caused in part by the fastest U.S. output in three decades. Saudi Arabia’s oil strategy is likely to remain unchanged as King Salman assumes power, Fatih Birol, chief economist at the International Energy Agency, said at the World Economic Forum in Davos, Switzerland, Bloomberg said.
West Texas Intermediate crude for March delivery fell 72 cents to end at $45.59 a barrel on the New York Mercantile Exchange, the lowest settlement since March 11, 2009. Futures fell 6.4 percent this week. The volume of all futures was about 13 percent above the 100-day average, the report said.
Brent crude for March settlement advanced 27 cents, or 0.6 percent, to $48.79 a barrel on the ICE Futures Europe exchange after climbing to $49.80. Volume was 2 percent above the 100-day average. Brent, used to price more than half the world’s oil, ended at a premium of $3.20 to WTI on the ICE, compared with $1.04 on Jan. 16, according to Bloomberg.
The euro dropped to the lowest level in more than 11 years versus the dollar as the European Central Bank widened its stimulus program. A stronger dollar reduced oil’s investment appeal, the report said.
Saudi Oil Minister Ali Al-Naimi, who led OPEC’s November decision to defend market share against surging U.S. shale supplies, remains in his post, according to state-run Saudi Press Agency, Bloomberg said.
Oil won’t return to $100 a barrel and global oil supply will be affected by the price slump, Alwaleed said in an interview with Bloomberg TV Friday, according to the report.
“If we reduce our production some other countries will fill that gap, ” he said. Saudi Arabia isn’t happy with low prices, “but it’s something you have to face head on without hesitation.”
Saudi Arabia’s stance of maintaining output levels will remain unchanged, said Commerzbank AG, BNP Paribas SA and Bank of America Corp, according to Bloomberg.