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Brent oil falls to $82, hitting four-year low

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Reuters LONDON

By Sam Wilkin

LONDON (Reuters) - Brent crude traded close to $82 per barrel on Tuesday after hitting a four-year low, as a firm dollar and robust production from U.S. shale oilfields outweighed a drop in Libyan output.

Brent for December fell $1.11 to $81.23 per barrel, its lowest since October 2010, and was around $82 by 1045 GMT. U.S. crude was down 20 cents at $77.20 per barrel.

The U.S. dollar hit a seven-year high against the yen and was up 0.2 percent on the day against a basket of currencies.

A strong dollar suppresses demand for oil and other dollar-priced commodities by making them more expensive for purchasers using other currencies.

 

"The path of least resistance is lower, until the OPEC meeting," said Michael Wittner, oil analyst at Societe Generale, in a research note.

Brent has fallen nearly 30 percent since late June due to rising production, slowing global demand, and the absence of clear signals from the Organization of the Petroleum Exporting Countries that it will cut output at a Nov. 27 meeting.

Falling prices have had little impact on drilling in the United States, with output from the fastest-growing and largest shale fields showing no sign of slowing, the Energy Information Administration said.

A supply shock in Libya lent some support to prices, as a rival government that has seized the capital took control of the country's biggest oilfield, El Sharara.

El Sharara and the eastern oil port of Hariga, which was shut by protests on Saturday, remain closed.

Libya's output in the coming months will depend on whether that government can consolidate control over assets and avoid international sanctions, but most analysts believe production in 2015 will be significantly lower than the peak above 900,000 barrels a day, achieved in September.

There was no breakthrough in negotiations between Iran and Western powers after talks in Muscat, officials said, but talks continued on Tuesday. A deal could result in the lifting of Western sanctions, paving the way for increased Iranian oil exports.

JPMorgan slashed its 2015 Brent price forecast by $33 to $82 per barrel on Monday, citing supply pressures in the Atlantic Basin and the apparent inability of OPEC member states to work cohesively to restrain production.

(Additional reporting By Jacob Gronholt-Pedersen in Singapore; Editing by Dale Hudson)

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First Published: Nov 11 2014 | 4:27 PM IST

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