Oil Declines From 5-Year Low on Signs U.S. Taking Fight to OPEC

West Texas Intermediate and Brent crude extended declines from the lowest close in more than five years amid speculation that U.S. oil producers will fight OPEC for market share. Futures dropped as much as 1.8 percent in New York and 1.9 percent in London. Crude explorers in the U.S. increased the number of operating rigs last week, defying predictions of a drilling slowdown, according to data from Baker Hughes Inc., a Houston-based field services company. Oil’s relative strength index remains below 30, signaling that the market is oversold. The Bloomberg Dollar Spot Index traded near the highest level since March 2009, damping the investment appeal of commodities. Crude is trading in a bear market amid signs that U.S. output is expanding even after the Organization of Petroleum Exporting Countries opted not to reduce its production quota. Falling oil prices will put “short-term pressure” on Iran’s budget, President Hassan Rouhani said in parliament yesterday, the Iranian Students’ News Agency reported. “This is primarily a supply-side issue,” Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone today. “Current supplies are too large for any foreseeable improvement in demand. The price needs to fall to a level that starts to really give the market some comfort that that new projects are going to be put on the backburner and delayed.” WTI for January delivery dropped as much as $1.21 to $64.63 a barrel in electronic trading on the New York Mercantile Exchange and was at $65.06 at 12:31 p.m. Sydney time. The contract slid 97 cents to $65.84 on Dec. 5, the lowest close since July 2009. The volume of all futures traded was about 18 percent above the 100-day average. Prices have decreased 34 percent this year. Brent for January settlement declined as much as $1.34 to $67.73 a barrel on the London-based ICE Futures Europe exchange. Prices lost 57 cents to $69.07 on Dec. 5, the lowest since October 2009. The European benchmark crude traded at a premium of $3.12 to WTI. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

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