Oil prices have tumbled on fears that the glut in the world oil supply would continue to mount as a crucial oil meeting prepared to kick off in Vienna.
The black stuff tumbled by 33 cents, or 0.5%, to $63.47 a barrel as the Organisation of the Petroleum Countries (OPEC) was expected to decide to continue producing about 2 million barrels a day above demand – adding to the glut that has left huge amounts of oil stored on tankers without a buyer.
“Although surprises from OPEC can never been ruled out, prospects for a policy reversal at this time range from slim to nonexistent,” said Bhushan Bahree, senior director at the HIS Energy consultancy.
The glut is the result of the shale boom in the US, where fracking has enabled producers to access huge quantities of oil from the rocks that had previously been beyond reach.
The latest oil price decline comes despite some OPEC members publicly talking for the first time about a new “fair” price for their crude of around $75 or $80 a barrel.
Iraqi oil minister Adel Abdel Mahdi said a price at this level would be “equitable”.
However, Saudi Arabia – which has for years pointed to $100 a barrel as being the right price – shows no sign of changing its view.
Maria van der Hoeven, executive director of the International Energy Agency, said that the biggest capacity growth within OPEC was expected in Iraq, and warned of potential supply disruptions due to the ongoing crisis with Islamic State, which now controls large swathes of Syria and Iraq.
Separately, the collapse in the oil price – which stood at $115 a barrel last summer – has claimed its latest victim, with high pressure engineering company Pressure Technologies forced to issue a profits warning.
The group, which makes products used in the industry, said falling prices had hit profits in its Precision Machined Components and Engineered Products divisions.
The group said that while the price of crude oil had partially recovered from its recent lows, there has been a further slowdown in recent weeks in new projects in the oil and gas market.
