Oil prices continued their rout on Tuesday with Brent crude and U.S. WTI both falling to their lowest in almost six years, as a persistent global supply glut offset data showing record high imports by key consumer China.
Meanwhile, United Arab Emirates Oil Minister Suhail bin Mohammed al-Mazroui said on Tuesday that OPEC won't change its oil production strategy and any sudden rebound of prices is unlikely.
The benchmark prices have plunged 60 per cent from their 2014 peaks hit in June, dragged down by losses of more than 36 per cent seen in the past seven weeks.
"Oversupply and weak demand still plagues the oil market. These fundamental factors ... will continue to push it down if (they) do not change," Singapore-based Phillip Futures said.
February Brent crude fell more than 3 per cent to a low of $45.84 a barrel by 0655 GMT, the lowest since March 2009. U.S. crude for February was trading at $44.90 a barrel, after reaching $44.86 earlier, its weakest since April 2009.
The falls came despite record Chinese crude imports for December, which rose above 7 million barrels a day for the first time as the world's No.2 oil consumer took advantage of low prices to build up its strategic reserves.
Banks have slashed their oil price outlooks, with analysts at Goldman Sachs cutting their average forecast for Brent in 2015 to $50.40 a barrel from $83.75.
They lowered their U.S. crude outlook to $47.15 from $73.75, saying it would need to stay near $40 for most of the first half of 2015 in order to curb production and end a global supply glut.
Dutch bank ABN Amro also cut its outlook, seeing an average Brent price of $60 in 2015 and $55 for U.S. WTI crude.
Macquarie said in note this month that it saw oil markets in the midst of a commodities fundamental cycle of "severe price decline" due to strong supply growth and high stocks.
UAE Oil Minister says OPEC won't blink
United Arab Emirates Oil Minister Suhail bin Mohammed al-Mazroui was speaking at an energy conference in Abu Dhabi as Brent crude oil dropped into the $46 a barrel area, almost a six-year low, following a 5 per cent plunge on Monday.
“The strategy will not change...” he said. By not adjusting output, “We are telling market and other producers that they need to be rational and like OPEC, they need to look at growth in the international market for oil and need to cater that additional production to that growth.”
He also said, “We have seen oversupply coming from shale oil and that needed to be corrected.”
Mr. Mazroui said the oil price drop was not in any way affecting the UAE's investment to expand its oil production capacity, but that he did not expect any sudden rebound of oil prices.
“History tells us whenever we try to predict what will happen we will get it wrong. What I would say is that it is unlikely we will see a sudden rise - it will take some time...
“It will all depend on what we see in this quarter and the next quarter. The first half of 2015 will give us more data to predict what will happen,” he said.
Mr. Mazroui also said the oil market would “take time to stabilise. But will that time be two or three years? It depends how rational producers are.”
In answer to a question, he said the government would encourage Abu Dhabi state fund Mubadala and state energy investor Abu Dhabi National Energy Co. to look at acquisition targets and investment opportunities created by low oil prices.
“They will be looking at targets because this is an opportunity if you believe things will improve upwards, and we believe things will not stay for long at these oil prices.
“And so we will encourage these companies to look at targets, and we have seen in the past that these investments create best values for those who buy at that time,” Mr. Mazroui said.
