Brent Down As OPEC Hints At No Supply Cut

Brent crude oil tumbled on Monday morning after news that OPEC is not considering an output cut further escalated concern about oversupply in the market. The commodity traded at $88.55 at 7:30 GMT despite better than expected trade data from China.

On Monday, a Chinese report showed that the nation’s crude imports had increased 9.5 percent from August, a sign that the world’s number two consumer had a growing oil appetite. The figures were unexpectedly higher than estimates and helped boost confidence in global demand growth as the nation’s most recent economic releases have been disappointing.

However, the Chinese data was not enough to counterbalance the $1 loss caused by speculation that OPEC is not planning a supply cut at its November meeting. CNBC reported that Kuwait’s oil minister  Ali al-Omair has said that the organization is unlikely reduce output in order to boost prices and that a price of $76 or $77 per barrel may be where Brent finishes it’s downward spiral, as that is the cost of US and Russian oil.

Also weighing on crude prices were reports that Saudi Arabia is willing to accept a price far lower than $100 per barrel for its crude. Most OPEC nation need oil to be priced at $100 in order to balance their budgets, but Saudi Arabia has said  it would be willing to allow prices to drop as low as $80 for an extended period.

Many see OPEC trying to regain some market share as rival producers like the US take over some of the group’s business. By allowing the commodity to drop and remain low for a long period, OPEC may be able to reclaim some of its customers.