LONDON: Oil fell below $34 on Friday to its lowest level in almost five years as the global economic slowdown overshadowed OPEC’s record supply cuts. U.S. light crude for January delivery fell $2.64 to $33.58 a barrel by 6:50 a.m. EST. It earlier touched $33.44, the lowest since early February 2004.
London Brent crude was trading 18 cents up at $43.54.
Oil prices have fallen by more than $110 from their peak above $147 in July. They look set for their second biggest weekly decline since 2003.
“Until traders see a sustained drop-off in the rate of demand destruction, the market will have a hard time establishing a floor,” Jonathan Kornafel, Asia Director of Hudson Capital Energy, said.
“From a credibility standpoint, OPEC has no choice but to bite the bullet for the next few months.”
Oil has continued to drop despite pledges by the Organization of the Petroleum Exporting Countries (OPEC) this week to remove 2.2 million barrels per day from its supply, which will be the largest ever reduction by the producer group.
OPEC kingpin Saudi Arabia’s Oil Minister Ali al-Naimi, speaking in London, said on Friday the kingdom would be pumping less oil in January and would be at its new output target in line with the group’s latest cut.
Other key markets were also falling on Friday. The dollar looked set for its biggest weekly decline since 1985 and world stocks fell as concerns about the U.S. economy worried investors in the last full trading week of 2008.
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