SINGAPORE: Oil prices sank to fresh 3-year lows Thursday in Asia as more bleak news from the world’s largest economy signaled that crude could tumble below $40 by the end of the year.
Light, sweet crude for January delivery was down 88 cents to $45.91 a barrel — the lowest since closing at $45.42 on Feb, 10, 2005 — in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract fell 17 cents overnight to settle at $46.79.
“You could see prices testing $40 by the end of the year because the economic data is really ugly at the moment,” said Christoffer Moltke-Leth, head of sales trading at Saxo Capital Markets in Singapore. “Demand destruction is still very much the concern.”
Oil prices have tumbled about 69 percent since peaking at $147.27 in July.
The Organization of Petroleum Exporting Countries has signaled it plans to lower output quotas at a Dec. 17 meeting, adding to a production cut of 1.5 million barrels a day in October.
Analysts are skeptical that an output reduction by OPEC can reverse the fall in the prices.
“I don’t think it will have a major impact in the near term,” Moltke-Leth said. “However, low prices will increasingly lead drilling and exploration projects to be postponed or canceled, so supply will become a concern in the medium term.”
In other Nymex trading, gasoline futures fell 2.12 cents to $1.02 a gallon. Heating oil dropped 1.65 cents to $1.57 a gallon while natural gas for January delivery slid 2.7 cents to 6.32 per 1,000 cubic feet.
In London, January Brent crude fell $1.24 to $44.20 on the ICE Futures exchange.
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