Brent crude held above $72 a barrel after hitting a new four year low earlier in the day after Opec decided not to cut oil output to support prices.
Opec's decision, which came after Saudi Arabia blocked calls from poorer members of the Organisation of the Petroleum Exporting Countries for output reductions, led to a rout in oil prices on Thursday.
Saudi Arabia and Opec had "relinquished" their role to balance the market from the supply side, Societe Generale analysts said in a note today. "Instead, the market itself - prices, in other words - will be the mechanism to rebalance the market. We cannot overstate what a dramatic and fundamental change this is for the oil market," the analysts said.
Brent crude was down 38 cents at $72.20 a barrel earlier, after plummeting $5.17 to close at $72.58 on Thursday. It earlier fell $1.46 in trading today to touch $71.12, its weakest since July 2010.
Brent is headed for its steepest monthly decline since November 2008, after falling more than 15 per cent this month. Brent has lost nearly 40 per cent since June, falling from above $115 a barrel as increasing shale output in North America created an oil glut amid sluggish global economic growth.
"I think traders realised in looking at the fundamentals that they haven't really changed," said Phin Ziebell, oil analyst at National Australia Bank, of Thursday's fall. US crude for January delivery plunged $4.79 from Wednesday's closing to $68.90 a barrel, after earlier dropping to its lowest since May 2010 at $67.75.
US markets were shut on Thursday for the Thanksgiving holiday. US crude has shed almost 15 per cent in November, its biggest monthly drop since May 2012. Russia's most powerful oil official Igor Sechin said oil prices could fall to $60 or below by the end of the first half of next year. If prices remained low, Russia had the potential to cut between 200,000 and 300,000 barrels per day of production, Mr Sechin said.
Responding to Opec's decision, Venezuela president Nicolas Maduro said the country would keep campaigning for output cuts until oil prices rebounded to $100 per barrel.
A further blow to global oil demand could come on Monday when China releases official Purchasing Managers' Index (PMI) data for November that could show slower growth, according to a Reuters poll.
Reuters
