free Commodity updates - Crude oil futures tanked nearly 4 per cent in the domestic market on Friday as investors and speculators resorted to heavy selling after the OPEC, the cartel that accounts for about 40 per cent of global crude supplies, refused to curb production to alleviate a supply glut.
At Vienna, on Friday, the cartel ditched its idea of limiting output to control prices. Instead, the cartel went for a Saudi Arabia-led policy of pumping oil at continued high rates to squeeze out rivals including US shale drillers, to regain market share.
The cartel set aside its daily production target of 30 million barrels per day, which many members had previously ignored as they were producing close to 31.5 million barrels per day. OPEC has set a production target almost without fail since 1982.The OPEC verdict overshadowed a third straight drop in US rig count, which signaled lower US production, going ahead. Baker Hughes reported that the number of US rigs drilling for oil fell by 10 to 545 last week.
Strength in the US labour market bolstered hopes of a pickup in oil demand in the world’s biggest oil consumer as US jobs data trumped expectations. The world’s biggest economy added 211,000 jobs in November as the jobless rate stayed at over a seven-year low of 5 per cent while October’s payrolls gain was upwardly revised to 298,000.However, US trade gap widened 3.4 per cent to USD 43.9 billion in September amidst weaker overseas sales.
Oil may continue to remain in reverse gear as OPEC’s decision to abandon its production target has given the license to members to produce oil as much as they want in a bid to recapture lost market share
At the MCX, Crude oil futures, for the December 2015 contract, closed at Rs 2,684 per barrel, down by 3.8 per cent, after opening at 2,780, against the previous close price of Rs 2,791. It touched an intraday low of Rs 2,661.
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