Brent and West Texas Intermediate extended declines from the lowest price in more than four years amid speculation that the Organization of Petroleum Exporting Countries (Opec) will refrain from cutting output when ministers meet in Vienna on Thursday.
Brent futures slid as much as 1.9 percent in London, dropping for a fourth day. Falling prices will stabilize on their own and Persian Gulf group members have reached a consensus on production, according to Saudi Arabia’s Oil Minister Ali Al-Naimi. The Opec will take a “unified position,” he said on Wednesday, 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.
Crude has collapsed into a bear market amid the highest US output in three decades and signs of slowing global demand growth. A Bloomberg News survey showed 20 analysts were evenly divided on whether Opec will reduce supply to support prices. The 12-member group, which pumps about 40 percent of the world’s oil, has an official quota of 30 million barrels a day.
“Opec is the main event,” Michael McCarthy, a chief strategist at CMCMarkets in Sydney, said by phone on Thursday. “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 $76.55 at 2 p.m. Sydney time. It slid 58 cents to $77.75 on Wednesday, the lowest close since September 9, 2010. The European benchmark crude traded at a $3.77 premium to WTI.
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.
US stockpiles
Crude inventories in the US, the world’s biggest oil consumer, expanded by 1.95 million barrels to 383 million through November 21, the Energy Information Administration reported on Wednesday. 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. Bloomberg News
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.
Bloomberg News