Oil At Four-Year Low As Opec Output Cut Looks Unlikely
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Brent crude fell to a four-year low under $76.30 a barrel on Thursday as it became increasingly unlikely that Opec would cut output in support of prices during a meeting in Austria.
Gulf producers in the Organization of the Petroleum Exporting Countries (Opec) - Saudi Arabia, Kuwait, Qatar and the United Arab Emirates - said on Wednesday that they will not propose an output cut during the official meeting on Thursday, reducing the likelihood of any joint action to prop up prices that have sunk by a third since June.
"Dreams of rising oil prices smashed with pre-Opec meeting sentiments. Brace yourselves for lower oil prices," Singapore-based Daniel Ang of Phillip Capital said on Thursday.
Some analysts have said that oil prices could slide to $60 per barrel if Opec does not agree to a significant output cut.
Benchmark Brent futures dropped over $1 on Thursday to $76.28 a barrel, the lowest level since September 2010. U.S. crude also dropped over $1 to a session low of $72.61.
Following the sharp falls, the contracts recovered slightly to $76.62 and $72.82 a barrel, respectively, at 0444 GMT.
Increasing Chinese and U.S. oil stocks boosted available supplies, further weighing on crude values.
Crude inventories in the United States rose by 1.9 million barrels in week ended Nov. 21, according to the U.S. Energy Information Administration, about four times analysts' expectations for an increase of 467,000 barrels.
In China, the government has quietly increased its strategic petroleum reserves (SPR) to around 30 days' worth of imports, double the amount revealed by its official schedule, as the world's top energy consumer takes advantage of the dive in crude prices to strengthen its position in the global oil market.