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Oil dropped to the lowest level in almost seven years following OPEC’s decision to abandon the group’s production limits.

Brent futures fell below $40 a barrel during trading for the first time since 2009. The Organization of Petroleum Exporting Countries set aside its output target of 30 million barrels a day and endorsed current output of about 31.5 million at its Dec. 4 meeting in Vienna. Money managers’ were the least-bullish on West Texas Intermediate oil in five years, according to government data for the week ended Dec. 1.

Oil has slumped about 40 percent since Saudi Arabia led OPEC’s decision a year ago to maintain output and defend market share by pressuring higher-cost producers. The lack of any limit on OPEC supplies could lift the lid on millions of barrels of additional crude from countries such as Iran next year.

"This is the kind of two-way trade we get when we move to a new prices area," said Tim Evans, an energy analyst at Citi Futures Perspective in New York. "There was probably profit-taking by some of the shorts and bargain-hunting by those that think we’re going to rise for at least a little bit. Short-term gains in no way negate the bearish implications of OPEC disarray."

WTI for January delivery declined 14 cents, or 0.4 percent, to settle at $37.51 a barrel at on the New York Mercantile Exchange. It’s the lowest settlement since February 2009. The volume of all futures traded was 94 percent above the 100-day average at 4:39 p.m.

API Estimates

Futures rose from the close after the American Petroleum Institute was said to report U.S. crude supplies fell 1.9 million barrels last week. WTI traded at $37.81 at 4:43 p.m.

Brent for January settlement dropped 47 cents, or 1.2 percent, to end the session at $40.26 a barrel on the London-based ICE Futures Europe exchange, also the lowest since February 2009. It’s the lowest close since February 2009. The European benchmark crude closed at a $2.75 premium to WTI.

OPEC had a collective target of 30 million barrels a day since 2012. Most of the global market “doesn’t have any ceiling” on production, Iraqi Oil Minister Adel Abdul Mahdi told reporters after the meeting in Vienna. “Americans don’t have any ceiling. Russians don’t have any ceiling. Why should OPEC have a ceiling?”

After OPEC’s decision, “everyone does whatever they want,” according to Iranian Oil Minister Bijan Namdar Zanganeh. The Persian Gulf nation is seeking to boost crude exports by as much as 1 million barrels a day next year when international sanctions over its nuclear program are removed.

Succinct Summation

"The Iranian oil minister said everyone does as they want, which is a succinct summation of the state of OPEC," Evans said. "This leaves us in a nervous and bearish situation."

The Energy Information Administration is projected to report that U.S. crude inventories climbed 1.3 million barrels last week, according to a Bloomberg survey of analysts. Supplies stood at 489.4 million in the week ended Nov. 27, the highest level for this time of year since 1930.

U.S. refineries probably increased operating rates last week sending inventories of gasoline and distillate fuel, a category that includes diesel and heating oil, higher, according to the survey.

Gasoline futures for January delivery dropped 0.5 percent to $1.2036 a gallon, and January diesel fell 1.6 percent to $1.2592 a gallon, the lowest close for both in six years.

— With assistance by Grant Smith