Brent crude and West Texas Intermediate slumped to five-year lows amid concern that hedge funds and other money managers bet too much on rising prices. Brent and WTI tumbled 18 percent in November as the Organization of Petroleum Exporting Countries decided to maintain its 30 million-barrel-a-day output target. Crude has traded in a bear market since October amid the fastest pace of U.S. production in three decades, rising output from OPEC and signs of weakening global demand.
Brent for January settlement declined $2.86, or 4.1 percent, to $66.21 a barrel at 12:18 p.m. New York time on the London-based ICE Futures Europe exchange after reaching $65.93, the lowest intraday level since October 2009. The volume of all futures was 9.3 percent below the 100-day average.
The report quoted an unnamed Gulf oil official as saying that if prices did fall below $60 “it won’t be for a long time.”
Morgan Stanley cut its 2015 forecast for Brent crude, citing oversupply. The bank said Brent crude prices could average as little as $53 per barrel in 2015, although its base case scenario was for $70. This was down from an earlier estimate of $98.