Oil Extends Selloff on UAE Minister’s Comments
Nymex Crude Oil Futures Drop Below $45 Per Barrel
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at $44.95 a barrel at 0640 GMT, down $1.12 in the Globex electronic session. February Brent crude on London’s ICE Futures exchange fell $1.36 to $46.07 a barrel.
The Organization of the Petroleum Exporting Countries will maintain its decision to keep output unchanged regardless of current oil prices, the United Arab Emirates’ oil minister said Tuesday. He said producers outside the group need to be rational and adjust their output according to the market.
“(OPEC) cannot continue protecting a certain price. That is not the only aim of OPEC,” Suhail Mohamed Faraj al-Mazrouei said at an energy event in Abu Dhabi organized by Gulf Intelligence.
Oil prices had lost around 5% on Monday alone, extending the selloff that has gripped oil markets since mid-2014, as sell-side analysts slashed price forecasts and warned of a prolonged glut in global oil markets that will extend well into 2015.
“Investors are so afraid right now they will just react to any negative news,” economist Vyanne Lai at National Australia Bank said by phone. She said in the current environment where volatility is high, investors aren't getting any direction to indicate markets could get stronger and it is a futile exercise to try and pick a price bottom.
“We’re left in a vacuum in terms of what would move fundamentals at this stage. It will remain a more sentiment-driven market, and so far sentiment is on the downside,” Ms. Lai said.
Strong trade data from China, the world’s second-largest oil consumer, failed to boost sentiment. China’s December exports rose by a faster-than-expected 9.7% on the back of stronger overseas demand, a small bright spot in the country’s slowing economy.
Its oil imports for the month hit record highs. China imported 30.37 million metric tons of crude oil in December, equivalent to 7.2 million barrels a day, preliminary data from the General Administration of Customs showed Tuesday. This was 13% higher than a year earlier, and topped a record high in January 2014 of 28.16 million tons of imported oil.
“This was largely expected given the surge in Chinese buying as prices have fallen, with imports expected to remain very strong in January and February,” analyst Ivan Szpakowski at Citi Research said.
But while China posted a 9.7% growth in oil imports in 2014, Mr. Szpakowski expects net imports to grow at a slower 3% for 2015 due to fewer new refineries being built this year.
Later Tuesday, the U.S. Energy Department will publish its monthly oil market report and any major revisions to global oil demand or supply projections could move oil prices.
Nymex reformulated gasoline blendstock for February—the benchmark gasoline contract—fell 130 points to $1.2615 a gallon, while February diesel traded at $1.6341, 200 points lower.
ICE gasoil for February changed hands at $461.75 a metric ton, down $9.75 from Monday’s settlement.