Brent fell below $65 for the first time in more than five years as OPEC cut the demand forecast for its crude oil to a 12-year low. West Texas Intermediate dropped near $60 as U.S. inventories grew.

Both benchmarks are more than 40 percent below their 2014 peaks in June. OPEC reduced its projection for 2015 by about 300,000 barrels a day to 28.9 million in its monthly report today. U.S. crude inventories rose to the highest seasonal level in weekly data that started in 1982, the Energy Information Administration said.

Brent has collapsed 17 percent since Nov. 26, the day before OPEC agreed to leave its production limit unchanged at 30 million barrels a day, resisting calls from members including Venezuela to cut output to stabilize prices. The decision prompted the biggest one-day decline in more than three years.

“The sentiment is horrible right now,” said Paul Crovo, a Philadelphia-based oil analyst at PNC Capital Advisors. “People are just throwing in the towel. I don’t think anybody knows what OPEC wants to do.”

Brent for January settlement decreased $2.60, or 3.9 percent, to $64.24 a barrel on the London-based ICE Futures Europe exchange, the lowest settlement since July 2009. Prices are down 8.4 percent this month after a drop of 18 percent in November.

WTI for January delivery fell $2.88, or 4.5 percent, to $60.94 a barrel on the New York Mercantile Exchange, also the lowest settlement since July 2009.

Crude Demand

“Another target bites the dust,” Eugen Weinberg, head of commodities research at Frankfurt-based Commerzbank AG, said by phone before the OPEC report was published. “We are still searching for the bottom, and may not find it until OPEC changes policy or low prices begin to eat into production.”

Demand for OPEC’s crude next year will be below the 28.93 million required in 2009 and the lowest since 27.05 million in 2003, the group’s data show.

OPEC pumped 30.56 million barrels a day in November, exceeding its collective target of 30 million for a sixth straight month, a Bloomberg survey of companies, producers and analysts showed.

The markets will correct themselves, Saudi Arabian Oil Minister Ali Al-Naimi told reporters as he attended UN global warming talks in Lima, Peru. “Why should I cut production?” he said when asked if the country will cut output.

Incredibly Bearish

“The Naimi comments are incredibly bearish,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. “He is sticking to his guns, which is going to foster more panic in the market.”

Crude might fall to $40 a barrel amid a price war or if divisions emerge in OPEC, Mohammad Sadegh Memarian, head of petroleum market analysis at the Oil Ministry in Tehran, said yesterday. Iran, hobbled by economic sanctions over its nuclear program, wants to raise production to 4.8 million barrels a day once the curbs are removed, he said at a conference in Dubai.

The risk of Brent dropping to $60 is clear, Francisco Blanch, head of commodities and derivatives research at Bank of America Corp., said yesterday at a press event in New York. WTI may decline to $50, he said.

“In the past Saudi Arabia was willing to cut production to maintain price,” Stewart Glickman, an equity analyst at S&P Capital IQ in New York, said by phone. “That’s no longer the case because they are willing to let this thing crash and see what it does to U.S. shale producers.”

EIA Projection

WTI will average $62.75 a barrel in 2015, compared with a November projection of $77.75, the EIA said yesterday. Brent may trade at $68.08, down from an earlier estimate of $83.42, according to the Energy Department’s statistical arm.

While the price drop will start to affect production next year, output is still forecast at the highest level since 1972, EIA Administrator Adam Sieminski said in a statement.

“As we move out in time, the markets will start to rebalance and we’ll see prices firm up a little bit,” Sieminski said in an interview on Bloomberg Television’s “Surveillance” with Brendan Greeley, Tom Keene, and Scarlet Fu. “I don’t think we’re going to get back to the over $100-plus oil that we had for the last three years.”

Crude stockpiles increased 1.45 million barrels to 380.8 million last week, the EIA said. Inventories at Cushing, Oklahoma, the delivery point for WTI futures, rose 1.02 million to 24.9 million. Refineries operated at 95.4 percent of their capacity, the highest level since August 2005, and processed 17 million barrels a day of crude and other oils, the most in a data series begun in 1989.

Gasoline inventories jumped 8.2 million barrels to 216.8 million. That’s the biggest gain since September 2001.

Gasoline futures fell 8.18 cents, or 4.8 percent, to $1.6418 a gallon on the Nymex, the lowest since September 2009. Regular gasoline at the pump slid 1.6 cents to $2.639 a gallon yesterday, the least expensive since February 2010, according to AAA.

To contact the reporters on this story: Jake Rudnitsky in Moscow at; Moming Zhou in New York at; Mark Shenk in New York at

To contact the editors responsible for this story: David Marino at Richard Stubbe, Charlotte Porter.