Brent and West Texas Intermediate
extended declines from the lowest price in more than four years
amid speculation that OPEC will refrain from cutting output when
ministers meet in Vienna today. According to Saudi Oil Minister Ali Al-Naimi, falling prices will stabilize on
their own and Persian Gulf group members have reached a
consensus on production.
The Organization of Petroleum Exporting Countries will take a “unified position,” he said yesterday, without elaborating on what will be decided. The group will do whatever it takes to balance the market, said the energy minister of the United Arab Emirates. The 12-member group, which pumps about 40 percent of the world’s oil, has an official quota of 30 million barrels a day.
Crude has collapsed due to the highest
U.S. output in three decades and signs of slowing global demand
growth.
“OPEC is the main event,” Michael McCarthy, a chief
strategist at CMC Markets in Sydney, said by phone today.
“The Saudi actions over the past month quite clearly indicate to the market that OPEC is unlikely to agree to production cuts, or if they do, the market will doubt the intent to deliver.”
Brent for January settlement declined as much as $1.47 to
$76.28 a barrel on the London-based ICE Futures Europe exchange
and was $76.66 at 3:48 p.m. Singapore time. It slid 58 cents to
$77.75 yesterday, the lowest close since Sept. 9, 2010. The
European benchmark crude traded at a $3.60 premium to WTI.
WTI for January delivery dropped as much as $1.08, or 1.5 percent, to $72.61 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 40 cents to $73.69 yesterday, the lowest close since Sept. 21, 2010. The volume of all futures traded was about 63 percent above the 100-day average. Prices have decreased 26 percent this year.
Iran, OPEC’s fifth-largest producer, won’t cut its output or ask Saudi Arabia to do so, according to Iranian Oil Minister Bijan Namdar Zanganeh. His country’s position on the market is close to that of the Saudis, he said after meeting Al-Naimi. Iran also held talks with Venezuela.
OPEC pumped 30.97 million barrels a day of oil in October,
exceeding its collective target for a fifth straight month, data
compiled by Bloomberg show.
According to Societe Generale SA, Brent will trade at $70 a barrel in 2015 and 2016 while WTI
may average $65.
Al-Naimi’s
comments were a “very clear indication that the Saudis and OPEC
will do nothing at the meeting,” Michael Wittner, the bank’s
New York-based head of oil market research, said in an e-mailed
report.
“It means that the market itself - prices, in other words - will be the mechanism to rebalance the market.”
In the U.S., the world’s biggest oil consumer, crude inventories expanded by 1.95 million barrels to 383 million through Nov. 21, the Energy Information Administration reported yesterday. That was the seventh gain in eight weeks. Supplies were projected to increase by 250,000 barrels, according to the median estimate in a separate Bloomberg survey of 10 analysts.
Stockpiles at Cushing, Oklahoma, the delivery point for WTI contracts, rose by 1.3 million to 24.6 million, said the EIA, the Energy Department’s statistical arm. Production climbed by 73,000 barrels to 9.08 million a day, the highest in weekly records that started in January 1983.
Gasoline inventories gained by 1.83 million to 206.4 million barrels, the report showed. Distillate fuels, which include heating oil and diesel, shrank by 1.65 million to 113.1 million.
