Oil prices continued to fall on Monday, extending a four-week decline as OPEC officials remain steadfast in their refusal to cut production.
The drop in crude prices, which pulled down stocks in Toronto, also comes amid falling prices for natural gas due to unseasonably warm weather across Canada and the United States.
Saudi Oil Minister Ali Al-Naimi said OPEC’s biggest producer will seek to maintain market share and that global demand this year was slower than expected.
Lack of cooperation from non-OPEC producers and wrong information in the market hit prices, Al-Naimi said at a conference in Abu Dhabi on Sunday, Bloomberg News reported.
Saudi Arabia’s oil policy doesn’t target other countries, and if non-OPEC producers were to offer cuts, OPEC probably wouldn’t follow suit, he said.
“Whether it goes to down $20, $30, $40, $50, $60, it is irrelevant,” he told the Middle East Economic Survey, referring to the U.S. price per barrel, when asked what price would prompt the Organization of Oil Exporting Countries to cut output.
Iraq plans to boost its production next year, the country’s oil minister said at the conference, Bloomberg reported.
Brent futures contracts dropped $1.27 (U.S.) per barrel to $60.11 on the London-based ICE Futures Europe exchange on Monday. Prices have fallen about 46 per cent this year, and are closing in on the largest drop since 2008.
Prices for U.S. crude, known as WTI or West Texas Intermediate, fell to $55.26 per barrel, down $1.87 on the New York Mercantile Exchange. The U.S. benchmark is down 44 per cent this year.
Oil prices have fallen about 21 per cent in the last month after OPEC initially said it would not cut production targets in the face of lagging global demand.
“They’ve been trying to rebound and they’ve come back down but we’re still seeing them hold around $55 (U.S.) per barrel for U.S. crude and $60 for Brent crude. They’re still trying to stabilize around that,” Colin Cieszynski, chief market strategist at CMC Markets in Toronto, said in an interview.
“In light of the big moves they’ve had over the last few weeks, we’re still seeing quite a bit of volatility around those levels.
Meanwhile, natural gas prices nearly 8 per cent in New York on Monday, with futures contracts falling to a two-year low. “That’s a function of all the nice weather we’re getting,” Cieszynski said. “The bottom for natural gas has been ripped right out from under it.”
Falling energy prices pulled the S&P/TSX Composite Index down by 35.88 points to close at 14432.38 points on Monday.
Cieszynski expects crude oil prices to test the $50 (U.S.) per barrel mark in the coming weeks.
“Nobody has shown any meaningful signs of shutting down production to bring it in line with demand,” he said. “There’s no reason to think this is going to be over any time soon. Even if we do stabilize, we’re likely to remain at a lower level for some time to come.”
Low energy prices are likely to result in a choppy start for the TSX in the first six months of 2015, Cieszynski said. However, as lower oil prices result in lower gasoline costs for consumers and businesses, higher economic growth in the coming months may also fuel stock market gains.
“I think the second half of the year could be very strong for the TSX, but the first half of the year could be choppy,” Cieszynski said.
- With files from The Toronto Star’s wire services