LONDON (TIP): Oil prices sank to four-year lows on November 4 following reports Saudi Arabia, OPEC’s largest oil producer, is cutting its prices for customers in the US. By early afternoon London time, a barrel of benchmark crude was down $2.07, or 2.6 percent, at $76.79, its lowest level since September 2010. Meanwhile, Brent crude, the international benchmark, was down $2.14, or 2.5 percent, at $82.63 a barrel, its lowest level since October 2010. The market was shaken by news that Saudi Arabia was cutting prices for the US to compete with the surge in oil production there.
“A snowballing effect is what we are seeing in crude oil price today,” said Fawad Razaqzada, an analyst at Forex.com. “News that Saudi has cut its asking price to customers in the US suggests even the largest OPEC producer is now worried about its market share. This does not bode well for the future of the cartel.” OPEC members are due to meet on November 27 in Vienna, Austria, but investors doubt the cartel will agree to cut production to raise prices. That is another reason why oil prices have remained under pressure. “With just 3 1/2 weeks to go before OPEC’s meeting, Saudi Arabia does not appear willing to curb its supply,” analysts at Commerzbank said in a report. “This makes it rather unlikely that any agreement to jointly reduce production will be reached … and suggests that pressure on oil prices will persist.”