Brent crude oil fell $2 to a 50-month low under $76 a barrel on Thursday as oil producers in OPEC looked set to keep output unchanged despite a huge oversupply in world markets.
Oil prices have fallen by more than a third since June as increasing production in North America from shale oil has overwhelmed demand at a time of sluggish global economic growth.
Ministers from the Organization of the Petroleum Exporting Countries were unlikely to agree a production cut at their meeting in Vienna on Thursday, sources close to the cartel said.
“We will probably see a further sell-off if there is no output cut agreed. We could even see Brent head below $70 a barrel,” Richard Mallinson, geopolitical analyst at London-based consultancy Energy Aspects, told Reuters Global Oil Forum.
Benchmark Brent futures were down by $1.55 at $76.20 a barrel by 1235 GMT, up from a 50-month low of $75.48 earlier in the session. U.S. crude also lost more than $1 to a session low of $71.89, and was last down $1.44 at $72.25.
Iraqi oil minister Abel Abdel Mehdi said on Thursday he saw a floor for oil prices at between $65 and $70 a barrel.
Ehsan Ul-Haq, senior oil market consultant at KBC Energy Economics, in Vienna for the OPEC meeting, said a KBC report expected oil prices stay under $80 a barrel.
“The probability of oil prices going below $70 a barrel is 20 percent, remaining in a range of $70-80 a barrel is 40 percent,” he told Reuters Global Oil Forum.
Rising U.S. shale oil production as well as increasing Chinese and U.S. oil stocks have boosted available supplies and also weighed on crude values, analysts say.
Energy Aspects estimated that U.S. crude output averaged 8.86 million barrels per day (bpd) in September, 1.12 million bpd more than in the same month last year, noting that this was “the fastest monthly growth since April”.
Crude inventories in the United States rose by 1.9 million barrels in the week that ended Nov. 21, according to the U.S. Energy Information Administration, about four times analysts’ expectations for an increase of 467,000 barrels.