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Oil prices continue to plummet

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Oil prices have slipped towards nearly six-year lows after OPEC officials underscored the cartel’s resolve to not cut output despite a supply glut and plunging prices.

On Tuesday, American oil prices settled at $45.89 a barrel, the lowest price since March 2009 when it finished at $42.33.

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Analysts say that richer cartel members – like the UAE and Saudi Arabia – have been ready to accept the price fall in the hope that it will force higher-cost shale producers out of the market.

“The latest OPEC member to hit the wires is the UAE, saying that OPEC members can withstand the crude drop, and that US shale drillers will be the first to curb production,” Matt Smith of Schneider Electric said.

“This is adding fuel to the fire after yesterday’s sell-off, and a stronger dollar and a potential build to crude stocks from tomorrow’s weekly US inventory report is encouraging another sell-off.”

The United Arab Emirates said on Tuesday the cartel could not stop world prices falling – and called for a cut in booming shale oil output in the US.

“We cannot continue to be protecting a certain price,” UAE Energy Minister Suhail al-Mazrouei said.

“We have seen the oversupply, coming primarily from shale oil, and that needed to be corrected,” he told participants in the Gulf Intelligence UAE Energy Forum in Abu Dhabi.

Kuwaiti Oil Minister Ali al-Omair said: “We expect this situation to continue until the surplus on the market is absorbed and the world economy improves.”

Global oil prices have slumped by almost 60 per cent since June as the market faces abundant supplies, demand fears and a strong US dollar in a stuttering global economy.

The slide accelerated in November when the Organisation of the Petroleum Exporting Countries, which provides about 30 per cent of global supplies, kept its production ceiling at 30 million barrels per day.

– with AAP

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