By Mark Shenk and Grant Smith

(Bloomberg) — Brent crude slumped to the bottom worth since mid-2004 amid hypothesis suppliers from the Middle East to the U.S. will exacerbate a glut as they combat for market share.

Futures fell as a lot as 2.3 p.c in London after a 2.8 p.c drop final week. Producers are specializing in lowering prices amid the worth decline, Qatar Energy Minister Mohammed Al Sada mentioned Sunday at a gathering of Arab oil-exporting nations in Cairo. Drillers within the U.S. put probably the most rigs again to work since July, including 17.

Oil has collapsed under ranges final seen in the course of the 2008 international monetary disaster on indicators the market’s oversupply will worsen. The Organization of Petroleum Exporting Countries successfully deserted output limits at a Dec. 4 assembly, whereas the U.S. on Friday handed laws that lifted a 40-year ban on crude exports.

“The market is continuing to grind lower as we search for a bottom,” mentioned Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut. “The weak fundamental picture is the focus of the market, and it remain so until there is a reining in of supply.”

Brent for February settlement dropped 63 cents, or 1.7 p.c, to $36.25 a barrel on the ICE Futures Europe change at 9:18 a.m. in New York. It touched $36.04, the bottom stage since July 2, 2004. Prices are down 37 p.c this yr, set for a 3rd annual loss.

Drill Rigs

West Texas Intermediate for January supply, which expires Monday, slipped 43 cents, or 1.2 p.c, to $34.30 a barrel on the New York Mercantile Exchange. It touched $34.11, the bottom since Feb. 13, 2009. The extra energetic February contract fell 39 cents to $35.67.

There’s no should be pessimistic about oil costs, Qatar’s Al Sada mentioned on the assembly of the Organization of Arab Petroleum Exporting Countries, which incorporates seven OPEC members. Crude is ready to climb from present “very low” ranges which might be hurting producers, Iraqi Oil Minister Adel Abdul Mahdi mentioned, with out predicting when costs might rebound.

“Excess supply to the tune of 1.3 million barrels per day, and OPEC’s divide will keep prices depressed in the near term,” mentioned Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “That said, supply adjustments are already under way. Non-OPEC production growth slowed almost to a standstill, and should decline next year.”

The variety of rigs concentrating on oil elevated to 541, Baker Hughes Inc., an oilfield-services supplier, reported on its web site Friday. The Permian Basin in West Texas led the positive aspects with 5 machines put again to work. U.S. crude stockpiles have expanded to 490.7 million barrels, greater than 130 million above the five-year common, Energy Information Administration knowledge confirmed final week.

U.S. Exports

The unfold between Brent and New York futures has shrunk to the narrowest in 11 months amid hypothesis that the U.S. plan to permit home oil to be shipped abroad might ease the nation’s oversupply. The European benchmark crude was at a premium of 70 cents a barrel to the February WTI contract.

“The Brent-WTI spread has narrowed a great deal since the lifting of the export ban,” McGillian mentioned. “We will probably return to the historical norm of WTI trading at a premium to Brent.”

U.S. producers together with Continental Resources Inc. and ConocoPhillips had been urgent for an finish to the restrictions. While repealing the ban may enable unfettered entry to provides, driving an important change within the nation’s oil coverage in additional than a era, patrons within the east might have a restricted urge for food for the standard of cargoes on provide.

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