NEW YORK - Oil markets retreated from multi-year lows on Tuesday but still fell more than 2 percent after Saudi Arabia cut export prices to the United States threatening to deepen a global supply glut that has driven prices down 30 percent since June.
US crude futures settled down US$1.59 at US$77.19 after reaching the lowest intraday price since October 2011 in the morning. The price of Brent for next-month delivery settled down US$1.96 at US$82.82 after touching its lowest point since October 2010.
On Monday, Saudi Arabia surprised the market by raising prices for Asia and Europe but cutting prices for US customers.
Oil slid as much as US$2 a barrel in late trade, and the sell-off continued Tuesday, triggering technical sell-stops. "The Saudis have basically declared war on the US oil producers," said Phil Flynn at Price Futures Group.
"I think they believe that the only way they're going to survive in the long term is to break the market in the short term."
The Organisation of the Petroleum Exporting Countries (OPEC) meets Nov. 27, but there are no clear signs whether it will curb output. The United Arab Emirates oil minister said the country is"not panicking". Venezuela and Ecuador have said they are working on a joint proposal to defend oil prices. "I can see OPEC and Saudi Arabia playing the long game. A low price for a period of time may actually play into the hands of people with a lot of reserves in the ground at cheap cost,"Pierre Lorinet, chief financial officer of Trafigura, said at the Reuters Global Commodities Summit.
Saudi Oil Minister Ali al-Naimi has not commented publicly on the oil market since September. On Wednesday, he will meet Venezuela's foreign minister Rafael Ramirez, also the head of its OPEC delegation, according to a person close to the Saudi delegation.