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 Brent crude fell close to $51 a barrel, its lowest since 2009, with
cuts to Saudi Arabia's official selling prices to Europe this week
adding more pressure to the 55 percent price rout since June.
Saudi Arabia's King Abdullah, in poor health last week, said the
country would deal with the challenge posed by lower oil prices
"with a firm will" but gave no sign the world's top exporter was
considering changing its policy of maintaining production in the
face of fast-growing U.S. shale supplies.
"We would need an indication that Saudi Arabia is considering output
cuts," said Carsten Fritsch, a commodities analyst with Commerzbank.
The Saudi official price cuts on Monday added to bearish data over
the weekend showing that Russia's 2014 oil output hit a
post-Soviet-era high and December exports from Iraq, OPEC's
second-largest producer, reached their highest since 1980.
Brent crude fell as low as $51.23 a barrel on Tuesday, its
lowest level since May 2009. It recovered slightly to $52.30 at 1227
GMT (0727 ET), down 81 cents on the day.
U.S. crude was at $49.27, down 77 cents, after falling to
$48.47, its lowest since April 2009.
Fritsch at Commerzbank said other countries including Iraq, Iran and
Kuwait are likely to cut their official selling prices in the coming
days. The United Arab Emirate cut its prices on Tuesday.
Jitters over political uncertainty in Greece, and a downward
revision on Tuesday to Europe's December Composite Purchasing
Managers' Index (PMI), raised questions about energy demand in
Europe and compounded the bearish sentiment.
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A slew of factors was keeping up the downward pressure on prices,
analysts said, pointing to concerns about the Greek economy, high
oil output from Russia, Iraq and the United States, and a stronger
dollar.
"The weak euro should be one of the reasons," said Tamas Varga of
PVM oil brokerage in London. "When the Saudis are cutting prices,
the markets are not going to go higher."
In the face of official price cuts, markets shrugged off news about
rising hostilities and lower oil production in Libya, as well as
data showing the number of rigs drilling for oil in the United
States fell for a fourth straight week.
U.S. commercial crude oil and products stockpiles were forecast to
have risen in the week ending Jan. 2, a preliminary Reuters survey
showed on Monday.
(Additionall reporting by Florence Tan in Singapore; editing by
Jason Neely and William Hardy)
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