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Oil prices collapse as OPEC stands back, while US booms

Will gas prices remain low?

Oil prices cratered as government data showed U.S. oil production hitting a new high-water mark, while traders increased bets that OPEC will not curb its own output to stop the rapid price decline.

The U.S. last week produced an estimated 9.06 million barrels a day of crude oil, according to the latest government data. The last time the U.S. produced 9 million barrels a day of oil for any stretch was 1986, when the monthly average in March of that year was 9.13 million barrels a day, according to the Energy Information Administration.

"Psychologically, the fact that the U.S. produced over 9 million barrels a day for the first time in 30 years was bearish for the market," said Andrew Lipow, president of Lipow Oil Associates. Lipow said there was also an increase in inventories at the Cushing, Oklahoma, hub which was taken as bearish.

Oil has fallen sharply since Saudi Arabia's oil minister, Ali al-Naimi, indicated Wednesday that it is the market that sets prices, not Saudi Arabia. He also said recent talk of "price wars" was a "misinterpretation" and that Saudi Arabia is working to stabilize prices. Those comments were taken as a sign the kingdom has no intention of cutting production, nor will OPEC when it meets Nov. 27.

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