* Brent falls $3 to lowest since October 2009
* Morgan Stanley cuts Brent forecast to $70 a barrel in 2015
* Kuwait sees oil at $65 a barrel for next 6-7 months
(Updates prices in paragraphs 5-6, adds quote)
By Jessica Resnick-Ault
NEW YORK, Dec 8 Oil dived 4 percent to new
five-year lows on Monday, as Wall Street expectations of a
deeper price slump next year and a Kuwaiti prediction for $65
crude set off one of the biggest declines this year.
The chief executive of Kuwait's national oil company said
oil prices were likely to remain around $65 a barrel for the
next six to seven months, the latest indication that Gulf
producers are content to ride out the rout.
The pessimistic outlook deepened the decline in a market
that many traders see as a one-way bet for the time being.
"When these things go lower, they tend to go much farther
than people anticipated," said Tariq Zahir at Tyche Capital. "I
definitely think we're going to keep heading lower, everyone is
trying to pick a bottom."
Brent for January fell $2.88, more than 4 percent,
to settle at $66.19 a barrel, the third-largest one-day
percentage drop this year and its lowest settlement price since
U.S. crude fell 4.2 percent or $2.79 to end at $63.05
a barrel, its lowest since July 2009.
Late on Friday, Morgan Stanley set a new bar for bearishness
on Wall Street, slashing its average 2015 Brent base-case
outlook by $28 to $70 per barrel and warning that prices could
drop as low as $43 a barrel next year.
"Without OPEC intervention, markets risk becoming
unbalanced, with peak oversupply likely in the second quarter of
2015," Morgan Stanley analyst Adam Longson said.
Thus far, there appears little sign of intervention, even
after oil prices dropped 15 percent, or nearly $12 a barrel,
since the Organization of the Petroleum Exporting Countries
opted not to cut production at its Nov. 27 meeting.
Top exporter Saudi Arabia has resisted calls from poorer
members to curb output and shore up prices that have slumped
more than 40 percent since June.
It is unclear how soon the price slump will slow the U.S.
shale boom. The number of onshore rigs drilling for crude oil
remains relatively high, and new U.S. projections released on
Monday show production from the big three U.S. shale plays
should carry on growing at over 100,000 barrels per day into
However, many companies are already starting to make deep
cuts to spending for next year. On Monday, Conoco said
it would slash spending by 20 percent, or $3 billion, the
biggest reduction thus far announced by U.S. drillers.
Analysts at Standard Chartered said they expect drilling
activity to fall "significantly" within two months.
(Additional reporting by Jack Stubbs in London, Manolo Serapio
Jr in Singapore, Adam Rose in Beijing and Rania El Gamal in
Kuwait; Editing by Christopher Johnson, Chizu Nomiyama,
Bernadette Baum and Marguerita Choy)