The North Sea crude benchmark for November delivery lost $1.67 to hit a new 47-month low of $83.37 a barrel intraday, before rising to $84.20 at 1004 GMT. Brent crude has now dropped more than 25% since hitting a nine-month peak in June. The US crude tumbled to $80.84 a barrel, down $1 from Tuesday, after recording its biggest drop in a single session in nearly two years in the last session.
Analysts say brent crude hit below $84 per barrel intraday because there were no signs of a production cut by the Organization of the Petroleum Exporting Countries (Opec) as key members, including Saudi Arabia and Iran, fight to raise their market shares in a bid to prevent revenues from falling, especially in view of a tough competition by the US shell producers. In fact, Iran said on Tuesday it was ready for lower oil prices, reinforcing Opecs willingness to live with lower oil rates to curb growth in supplies from the US and Russia.
Analysts feel any competition between Opec and non-Opec suppliers is good for a net importer like India, which meets 78% of its annual requirements through purchases from overseas.
Compounding Opecs worries, the International Energy Agency (IEA) trimmed its oil demand growth forecast for 2015 by 3,00,000 barrels per day (bpd) from its previous forecast to 93.5 million bpd. It also lowered its 2014 estimate by 200,000 bpd to 0.7 million bpd, causing the biggest slide in brent prices in more than three years, on Tuesday.