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![Are investors missing 2015? Fears of overstocked US inventories and a failure to have OPEC meet to curb production helped push oil prices back into $30 territory and reversed most of the upward trends of global stocks last year [Xinhua]](http://thebricspost.com/wp-content/uploads/2014/02/210683089_8-e1392661334664.jpg)
Are investors missing 2015? Fears of overstocked US inventories and a failure to have OPEC meet to curb production helped push oil prices back into $30 territory and reversed most of the upward trends of global stocks last year [Xinhua]
Oil Minister Eulogio Del Pino embarked on an ambitious mission last week to meet with OPEC heavyweights and Russia to drum up support for an emergency meeting to curb oil production.
While he received support for a summit from Iran and Russia, the Saudis appear to have balked.
Saudi Arabian Oil Minister Ali al-Naimi al Saud his talks with Del Pino in Riyadh were successful, but made no mention of a summit.
This all but dashes two weeks of speculation among global investors that the Russians and Saudis were willing to talk about production quotas.
With OPEC’s removal of output caps in January, the oil cartel is now selling 32.5 to 33.5 million barrels of oil a day – well above market demand.
According to the International Energy Agency, Saudi Arabia produced at least 10.2 million barrels a day in January. By comparison, Venezuela pumped into global markets only 2.5 million barrels a day.
Russia, meanwhile, injected into the markets nearly 11 million barrels a day. The Saudis had previously indicated they wanted Russia to first commit to curbing production before any summit could be held. Not surprisingly, the Russians have declined that offer.
US benchmark West Texas intermediate crude dropped three per cent to $29.69 a barrel at closing on Monday but regained to $30.03 in after hours trading.
Overstock fears have also pulled oil prices down this week. The US inventory of oil has broken record numbers for the first time in some 80 years, the US Energy Information Administration said earlier.
Gasoline inventories in the US are at their highest in 35 years.
A previously published report from global investment firm Goldman Sachs sees that the turmoil will likely grow throughout the remainder of the year; it warns that with supply far outpacing demand storage facilities are at near saturation points.
“Distillate storage utilization in the U.S. and Europe is nearing historically high levels, following near record refinery utilization, only modest demand growth (especially relative to gasoline), and increased imports from the East on refinery expansion and Chinese exports,” the report said.
Goldman Sachs last quarter predicted that oil prices could fall to $20.
That’s not welcome news to Venezuela and other emerging markets which heavily rely on oil exports for their domestic spending.
Venezuela’s already cash-strapped and faltering economy took another hit following the failure of summit talks as its IBC index fell two per cent.
The International Monetary Fund says that Venezuela’s economy was in seven per cent contraction in 2015. Strategic cash reserves have fallen from $30 to $15 billion in the last year.
Other emerging markets, such as Mexico, are considering slashing their budgets as their economies take a beating from low oil and commodity prices.
Late on Monday, the Mexican peso fell one per cent against the dollar and the benchmark IPC index dropped 1.05 per cent.
At press time, Russia’s benchmark MICEX had fallen more than two per cent to 1,744 while India’s Sensex opened down about one per cent on Tuesday. Most Asian markets are closed for the Chinese New Year.
The MSCI Emerging Markets Index fell 0.7 per cent on Monday extending a second week of losses.
The BRICS Post with inputs from Agencies
