OPEC Members Request Emergency Meeting As Oil Prices Hit 12-Year Low … StanChart Analysts Say Prices Could Fall As Low As $10/bbl

Emmanuel Ibe Kachikwu, Minister of State for Petroleum Resources has said a ‘couple’ of  members of the Organisation of Petroleum Exporting Countries (OPEC) are requesting an emergency meeting, saying current market conditions justify the need to hold such a gathering.
Benchmark Brent crude oil futures LCOc1 were trading at less than $31 per barrel on Tuesday, their lowest level since April 2004, and have shed almost three-quarters of their value since mid-2014. At the current price, it means oil prices have fallen to near a 12-year low.
Kachikwu told reporters at an energy conference in Abu Dhabi that there was a lot of push from various blocs within ‎OPEC for the need of a meeting.
“A couple of countries, I don’t want to mention names,” he said when asked if any had requested holding an emergency meeting.
Any meeting that would take place would be to review OPEC’s position to see if there was any need to change its strategy, Kachikwu said, adding that the meeting could take place in February or March.
Much will depend on the attitude of OPEC heavyweight Saudi Arabia, which has resisted calls for a cut in production to help boost prices.
“Saudi Arabia‎ has never held the position that it does not want to talk,” Kachikwu said. “In fact, it was very supportive of a meeting before June, at the time when we held the December meeting, if (there was a) consensus call for it.”
Prices are down around 15 per cent since the start of the year, dragged lower by a glut, China’s weakening economy and stock market turmoil, as well as the strong dollar, which makes it more expensive for those using other currencies to buy oil.
Benchmark Brent crude fell to a low of $30.43 per barrel, a level last seen in April 2004, before recovering to $31.75, up 20 cents or 0.5 percent, by 1142 GMT.
“Every time you hit new lows there’s the potential for profit taking, and as people try to pick the bottom of the market,” said Richard Mallinson, geopolitical analyst at Energy Aspects.
U.S. crude West Texas Intermediate (WTI) fell to a low of $30.41 per barrel, a level last seen in December 2003, before crawling back to $31.06, down 35 cents or 1.11 per cent.
› Strong dollar inflicts more pain on oil as bearish options bets build
The overall tenor of the market remained bearish, analysts said.
Trading data showed that managed short positions in WTI crude contracts, which would profit from a further fall in prices, are at a record high, indicating that many traders expect further falls.
China’s slowing economy has also weighed on oil, which has shed more than 70 percent of its value since mid-2004.
And while demand looks fragile, supply from key producers remains robust.
Iraq, second-biggest producer within the Organization of the Petroleum Exporting Countries (OPEC), plans to export a record of around 3.63 million barrels per day from its southern oil terminals in February, said trade sources citing a preliminary loading program.
Analysts at Barclays, Macquarie, Bank of America Merrill Lynch, Standard Chartered and Societe Generale all cut their 2016 oil forecasts this week.
StanChart analysts took the most bearish view: “We think prices could fall as low as $10/bbl before most of the money managers in the market conceded that matters had gone too far”.

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