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The average price of benchmark Organization of the Petroleum Exporting Countries (OPEC) crudes dropped below $90 a barrel for the first time in more than two years amid muted demand and ample supplies.
The so-called OPEC basket, a weighted average of the main grades produced by the OPEC, slipped to $89.37 a barrel on Tuesday, the group's Vienna-based secretariat said by e-mail on Tuesday. It's the first time their reference price has dropped below $90 since 25 June, 2012. Global demand growth slowed in the second quarter to the weakest since 2011, while US output climbed to the highest in three decades, International Energy Agency and US energy department data show.
The Washington-based International Monetary Fund (IMF) lowered its estimates on Tuesday for global economic growth this year and the next. "It's $10 below OPEC's preferred target price," Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen, said by e- mail. "But so far there's no sign of action, so the oversupplied situation remains." OPEC, which supplies about 40% of the world's oil, is due to meet to review its output target on 27 November in Vienna.
The target has remained at 30 million barrels a day for almost three years. "OPEC is still hoping that the price weakness will prove temporary and that things will look a lot better when they meet," said Julian Lee, an oil strategist at Bloomberg First Word in London. "I don't think the basket dropping below $90 will change that."
The OPEC Reference Basket of Crudes comprises Saharan Blend from Algeria, Girassol from Angola, Oriente from Ecuador, Iran Heavy, Basra Light from Iraq, Kuwait Export, Es Sider from Libya, Bonny Light from Nigeria, Qatar Marine, Arab Light from Saudi Arabia, Murban from the United Arab Emirates and Merey from Venezuela. Bloomberg
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