Oil Hits $40, Petrol Prices Fall to Rs. 61 in Delhi

Oil fell the most in two months, paring the biggest three-day rally in 25 years as speculation faded that OPEC might coordinate with other nations to curb supply. Futures slipped 7.7 percent in New York after surging 27 percent in three days, Crude will remain at $40 to $60 a barrel into 2016 as rising supplies outpace demand, according to Ian Taylor, Chief Executive Officer of Vitol Group BV, the biggest independent oil trader. Iran plans to boost output by one million barrels a day within five months after sanctions against it are lifted

A drop in a Chinese factory gauge to the lowest in three years prompted speculation that growth in the world’s second-biggest oil-consuming economy is slowing. China’s official Purchasing Managers’ Index was 49.7 for August, down from 50 in July. Numbers below 50 indicate contraction.

The 12-member OPEC may shift policy and reduce output to keep Brent crude above $50 a barrel if demand in emerging economies falters, Bank of America Corp. said Aug. 28. Saudi Arabia, OPEC’s biggest member and architect of the current strategy to defend market share, “cannot sustain its spending sub-$40 a barrel for very long,” the bank said.

The oil-production surplus means stockpiles will keep expanding for “the next few quarters” and excess inventories won’t clear until 2017 at the earliest.