NEW YORK (Nov 13): Benchmark Brent crude fell below $80 a barrel on Wednesday for the first time since 2010 on technical selling, pressure from a strong dollar and after Saudi Arabia's oil minister refused to say if the kingdom will support calls from some OPEC members to cut crude output.
After settlement, the American Petroleum Institute said U.S. crude inventories shrank by 1.5 million barrels last week. But Brent did not rebound even though analysts polled by Reuters had forecast a build of 800,000 barrels. On Thursday, the U.S. government's Energy Information Administration will issue official weekly inventory data.
"It looks like sentiment in oil is so weak now that it's hard to get the market to believe in anything overly bullish," said Phil Flynn, analyst at the Price Futures Group in Chicago.
Oil prices also got no lift from news that an attempt to restart Libya's largest oilfield, El Sharara, had to be abandoned because of a blocked pipeline.
Brent hit a session low of $79.84, its lowest since September 2010, before settling down $1.29 at $80.38. After settlement, Brent slid below $80 again.
Worries of a global oil glut have pushed Brent down 30 percent from its June high above $115.
After Brent broke below technical support at $80.50, "it capitulated to a series of technical collapses," said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.
The strong dollar also weighed on Brent as the greenback hit a 14-month high against the British pound.
U.S. oil touched a session low of $76.63, then settled down 76 cents at $77.18.
In Mexico, Saudi Oil Minister Ali al-Naimi said during a visit that the kingdom wants stable oil markets. He also said talk of an oil price war was baseless.
But oil market players were disappointed when Naimi did not say whether Saudi Arabia will support a production cut at OPEC's meeting on Nov. 27.
"Parsing his words sounds to me like the Saudis will not cut," said John Kilduff, partner at New York hedge fund Again Capital.
The Saudis, top exporters of oil, said in OPEC's monthly report on Wednesday their output barely changed in October.
On Tuesday, the oil minister of Iran, which hopes for an OPEC output cut to boost prices, met Kuwait's emir as part of a tour ahead of a Nov. 27 meeting of the producer group. Kuwait's oil minister has said an output cut is unlikely.