Oil drops again below $40 as OPEC ramps up production

Oil prices went below the $40-mark for the second time within a month on the previous trading day on Monday, following a decision of the Organisation of Petroleum Exporting Countries (Opec) late last week to keep producing optimally in an already saturated market.

As per latest OPEC data, its new reference basket of 12 crude oils closed at $38.08 a barrel on Friday.

With the OPEC strategy designed to choke competition from the American shale industry, US light crude dropped $2 on Monday to less than $38 a barrel.

The Indian basket, comprising 73 percent sour-grade Dubai and Oman crude, and the balance in sweet-grade Brent, plunged to $38.61 on Monday for a barrel of nearly 160 litres.

In November, global price had gone below the $40-mark for the first time in 11 years.

Oil prices have been under pressure for several months due to concerns over oversupply, but the slump has deepened in the recent period.

Crude-oil production has remained robust despite the large drop in prices in the last year, as US producers continue to cut costs and OPEC members keep producing at full tilt.

The November drop below $40, after having been in the $43-47 range earlier, was attributed to uncertainties created by the terror attacks in France last month.

Oil prices have fallen by more than 50 percent in a little over a year from levels of well over $100 a barrel, provoked by the slowdown in China and other emerging market economies and the end of sanctions against Iran.

Indian oil and gas, energy and power companies stocks fell on Monday after the dip in global crude oil prices.

As a result, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange shed 154 points, or 0.60 percent, during the late-afternoon session.