Oil prices plunge to fresh five-year low in Asian trade

[SINGAPORE] Oil prices sank to a fresh five-year low in Asia on Monday after a top OPEC official said the relentless plunge was not just because of a global supply glut.

US benchmark West Texas Intermediate for January delivery fell 25 cents to US$57.56 while Brent crude for January was down one cent to US$61.84 in mid-morning trade.

Most oil market observers attribute the price slump to a supply glut - spurred by rising US shale oil production.

But Abdalla Salem el-Badri, the secretary general of the 12-nation Organization of Petroleum Exporting Countries, on Sunday said that was not the sole reason.

"We want to know the main reasons that have led to such a drop in oil prices," Badri told reporters at a conference in Dubai.

"When we look at supply and demand, there is a rise (in supply) but only a modest one that should not have led to this 50-per cent drop," he added.

"Speculation is strongly contributing to pushing prices down." On Friday, WTI fell US$2.14 to settle at US$57.81 in New York, its lowest closing point since May 2009. Brent for January, which expires Tuesday, fell US$1.83 to US$61.85 in London, its lowest close since July 2009.

The OPEC oil cartel decided last month to maintain its production level despite pleas by some producers to cut output in order to curb the price drop.

The Paris-based International Energy Agency last week said global oil demand will rise 0.9 per cent to 93.3 million barrels, some 230,000 barrels less than its previous forecast. This is despite the plunging prices that would normally lead to increase consumption.

French bank Credit Agricole said a two-day meeting of the US Federal Reserve starting Tuesday will next be in focus, amid market wariness about the central bank's timing of interest rates hikes next year.

AFP