Oil slips amid concern that growing U.S. economy is still insufficient to boost demand

Oil slid from the highest close in more than a week due to worries that the strengthening U.S. economy will not boost demand enough to clear a global surplus.

Gross domestic product in the U.S., the world’s biggest consumer, rose at a 5 percent annual rate from July through September, the most since 2003, according to revised Commerce Department data.

“The positive U.S. economic numbers only had a short-term effect on the market as growth there won’t lead to an increase in consumption,” Thina Saltvedt, an analyst at Oslo-based Nordea Markets, said by phone. “Globally, there is still an oversupply of crude.”

In London Brent crude descended as much as 2.9 percent, extending this year’s decline to 46 percent. OPEC will have to “step in” if prices continue to fall, Iraq Oil Minister Adel Abdul Mahdi said yesterday in an interview.

The “fair price” of oil that was $100 to $105 a barrel is now closer to $70 to $80 a barrel, Abdul Mahdi said. Iraq’s cabinet yesterday approved a budget based on $60 oil.

Brent for February settlement slid as much as $1.76 to $59.93 a barrel on the London-based ICE Futures Europe exchange and declined $1.62 to $60.07 at 12:35 p.m. local time. The contract climbed $1.58 to $61.69 yesterday, the highest close since Dec. 12. The volume of all futures traded was 63 percent below the 100-day average for the time of day.

WTI for February delivery slid as much as $1.49 to $55.63 a barrel in electronic trading on the New York Mercantile Exchange. The European benchmark crude traded at a premium of $4.30 to WTI.

According to the median estimate in a Bloomberg survey of nine analysts, U.S. crude inventories probably fell to 377.4 million barrels in the week ended Dec. 19.

Oil is heading for the biggest annual decline since 2008 amid a global glut exacerbated by the highest U.S. output in more than three decades. Prices have dropped about 20 percent since the Organization of Petroleum Exporting Countries decided Nov. 27 to maintain its output ceiling at 30 million barrels a day. Qatar’s Energy Minister Mohammed Al Sada said the market is oversupplied by 2 million barrels a day.

Production accelerated to 9.14 million a day through Dec. 12, the most in weekly data that started in January 1983.

OPEC, whose 12 members supply about 40 percent of the world’s oil, pumped 30.56 million barrels a day in November, a separate Bloomberg survey of companies, producers and analysts showed. That exceeded their collective target of 30 million for a sixth straight month.