But declining crude oil prices mean lower gasoline prices for drivers.
There are also conflicting stories on U.S. production.
“When oil prices started to edge down a year ago, most energy mavens thought the drop would be small and short-lived”.
US benchmark West Texas Intermediate (WTI) for delivery in September, expiring today, dipped 32 cents to $40.48 after falling sharply in New York to its lowest level since March 2009.
Brent crude, which serves as a benchmark for purchases of oil worldwide, fell $1.07 to $45.55 in London.
The world’s ninth-largest oil producer, Mexico buys options that will guarantee a minimum price for its crude and so protect its public finances from unexpected oil shocks.
Although the current collapse in oil prices, the second this year, has raised alarm within the OPEC, including some of its core Gulf members, there is no indication they will reverse their policy of keeping production wide open to defend market share. “The trend is down and vicious”, Bieber said in a brokerage note.
Friday’s downward price turn may be linked to a softer economy in China, where manufacturing had been consuming a lot of the excess oil.and continued slow economies elsewhere: Japan, Europe and Russian Federation and more. At 456.2 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Earlier in the session it fell to $40.50, a contract low.
Brent was on track for its seventh weekly decline in the past eight, trading 41 cents lower at $46.21 a barrel, after settling 54 cents lower on Thursday.
The organisation cited the pace of economic growth in emerging markets, continuing supply growth, increases in inventories and the possibility of growing volumes of Iranian crude hitting the markets as factors limiting the oil price.
Algeria is understood to have asked for urgent action, particularly on the oil production ceiling which governs the amount countries are allowed to produce.
“Technically, we are still seeing a very bearish momentum, however for prices to break below $40 is going to be an arduous task”, he said.
“Eventually, supply and demand will come into balance, but it will take a while”, Chip Hodge, who oversees a $9 billion natural-resource bond portfolio as senior managing director at John Hancock in Boston, said by phone.