A pump jack is seen at sunrise near Bakersfield
By Barani Krishnan
NEW YORK (Reuters) - U.S. crude fell 7 percent on OPEC's decision to not cut output, but light trading on Friday after the U.S. Thanksgiving Day holiday meant there could be more losses when markets return to full strength next week, traders said.
West Texas Intermediate (WTI) light U.S. crude hit a four-and-half-year low of $67.75 a barrel overnight after Saudi Arabia blocked calls on Thursday from poorer members of the Organization of the Petroleum Exporting Countries to reduce production. U.S. markets were officially closed on Thursday for Thanksgiving, with only electronic trading.
Traders said if WTI takes out the May 2010 low of $64.24, it could technically be headed for a test below $60, toward the low of $58.32 set on July 2009.
"There's a notion that yesterday's selling was overdone, but not everyone is fully back to work yet after Thanksgiving," said John Kilduff, partner at energy hedge fund Again Capital in New York. "WTI could certainly be down a couple of dollars more next week, and test newer lows from there."
U.S. crude's front-month contract was down $5.42 at $68.27 a barrel at 11:56 a.m. EST (1656 GMT). The drop of more than 7 percent was the biggest daily fall since 2011.
The front month for benchmark North Sea Brent crude was 40 cents lower at $72.18, after falling earlier to $71.12, a low since July 2010.
"We are seeing continued oversupply. I think $70 a barrel will be the new norm," said Bill Hubard, chief economist at Markets.com, referring to Brent.
With November trading in its final session, Brent was headed for a 15 percent loss on the month, or the steepest monthly decline since 2008. It has lost over 30 percent since June, falling from above $115, as increasing North American shale oil output helped create a glut amid sluggish global growth.
Russia's most powerful oil official Igor Sechin said oil prices could hit $60 or below by the end of the first half of next year. Options market data show speculators betting on $65 Brent by early 2016.
"The market is looking for a new paradigm, a new range to settle into. Where that is, is anybody’s guess," said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt.
(Additional reporting by Ahmed Aboulenein in London and Keith Wallis in Singapore; Editing by Christopher Johnson and Chizu Nomiyama)