Brent crude slipped below $69 a barrel on Friday, on track to finish the week below $70 a barrel for the first time since 2010, as cuts to official selling prices from Saudi Arabia added to recent pressure.
Prices remain near five-year lows as the market grapples with oversupply due to the U.S. shale boom and the recent decision by the Organization of Petroleum Exporting Countries not to cut production.
Prices pared early losses after stronger-than-expected U.S. employment data, while a slightly lower physical supply from the program that underpins the Brent crude benchmark in January also provided support.
But analysts said the Saudi cuts to monthly prices for crude it sells to the United States and Asia just a week after blocking cuts to OPEC’s output show it is stepping up its battle for market share.
“It’s been weighing on the market, showing that OPEC is not ready to end its price war,” said Commerzbank analyst Eugen Weinberg. “The lower the better seems to be the new paradigm for OPEC.”
The January Brent crude contract fell by $1.14 to $68.50 a barrel by 10:26 a.m. ET, on track for the ninth loss in 10 weeks. U.S. crude was down $1.35 at $65.46.
U.S. employment data showing non-farm payrolls rising by 321,000 jobs last month, above expectations of an additional 230,000 jobs, contrasts with the euro zone, where Germany’s Bundesbank this week halved its 2015 growth forecasts for Europe’s largest economy to 1 percent.
At the same time, oversupply could rise next year when Iraq starts to export more oil as a result of an agreement between Baghdad and the Kurdish regional government.
Libya is also set to restart its largest oilfield, El Sharara, once a pipeline blockage is cleared.
The combined pressure is preventing Brent from rebounding from a near 13-percent plunge last week.
The fall may put global oil and gas exploration projects worth more than $150 billion on hold next year, potentially curbing supply by the end of the decade.
Fatih Birol, chief economist with the International Energy Agency, said on Friday he sees oil prices rising to near $100 a barrel in the coming years. Analysts also expect oil prices to rebound in the next two years, averaging $82.50 a barrel in 2015, a Reuters poll showed. –Reuters
