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(Bloomberg) Oil extended losses below $40 a barrel amid speculation a record global glut will be prolonged as OPEC abandoned its long-time strategy of limiting production to control prices.
Futures dropped as much as 1.9 percent in New York after falling 4.2 percent last week. The Organization of Petroleum Exporting Countries will keep pumping about 31.5 million barrels a day, President Emmanuel Ibe Kachikwu said Friday after a meeting in Vienna. The group is setting aside its output quota of 30 million barrels a day, a target breached the past 18 months, until members gather again in June.
Oil has slumped about 40 percent since Saudi Arabia led OPEC’s decision in November 2014 to maintain output and defend market share against higher-cost U.S. shale producers. Global stockpiles have expanded to almost 3 billion barrels as the Saudis, Russia and Iraq increased supply, according to the International Energy Agency.
“There is significant excess supply capacity around the world now that if OPEC give up their share, they’re just inviting someone else to take it,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “We’re far away from any situation where OPEC might actually change the current position and move back to restraining supply.”
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