Mumbai : Crude oil contracts on Multi Commodity Exchange and New York Mercantile Exchange spiralled to an over-six-year low as the decision by the Organization of Petroleum Exporting Countries to keep output high left markets reeling.

Benchmark oil contract Brent North Sea crude dropped under USD 40 a barrel for the first time in almost seven years amid a general collapse in commodity prices.

Brent North Sea crude for delivery in January slid as low as USD 39.81 a barrel — the lowest point since February 2009 — on a global oil supply glut, weak demand growth and a strong dollar.

OPEC decided to continue producing oil at near-record levels with no price ceiling or output quotas. Crude oil prices are expected to remain depressed amid an oversupply glut.  With oil prices falling, OPEC hopes to slow non-OPEC production and force other producers like the US to cut their output.

OUTLOOK

“Bleak sentiments, supply overhang, rising crude inventories dominate oil markets and will be a bearish factor for oil prices to trade lower,” a report by Angel Commodities said. Oil prices have fallen by more than 50 percent in a little over a year from levels of well over $100 a barrel, provoked by the slowdown in China and other emerging market economies and the end of sanctions against Iran.    -Cogencis