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The bears have taken hold of the oil market, pulling prices down to levels last seen in 2010.
With geopolitical concerns taking a back seat, oil traders are responding to weak fundamentals. OPEC’s inaction in the face of the 25% slide in oil prices since June has led the bears to liquidate speculative long positions, which makes sense in an oversupplied market.
Saudi Arabia has not pressed the panic button, yet. The question now is how far prices have to go before it swings into action.
As the world’s largest oil exporter Saudi Arabia could halt the slide or at least slow it down if it so wished. But the OPEC kingpin has signalled, indirectly, that it is comfortable with oil prices below $90/B. It might even allow them to fall to $80/B for a year or two, Reuters reported, quoting analysts in New York briefed by Saudi officials.
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