Oil Near Eight-Month Low Before OPEC Meets on Production
Oil traded near its lowest close in eight months in New York before OPEC meets to discuss production quotas amid speculation the group won’t cut output as the global economy weakens.
Futures were little changed after earlier falling for the fifth time in six days. The Organization of Petroleum Exporting Countries, which meets in Vienna today, will probably maintain its output ceiling as concern that global growth is shrinking outweighs calls for supply cuts to stem sliding crude prices, three of the cartel’s oil ministers said. U.S. retail sales fell and Spain’s debt rating was cut by Moody’s Investors Service.
“OPEC is the top news at the moment and that’s going to be the driver,” Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney, said in a telephone interview. “OPEC is opaque at times and one of the issues that they grapple with, given that they are such a large and global organization, is compliance with quotas.”
Oil for July delivery was at $82.76 a barrel, up 14 cents, in electronic trading on the New York Mercantile Exchange at 1:20 p.m. Sydney time. The contract fell 0.8 percent yesterday to $82.62, the lowest close since Oct. 6. Prices are down 16 percent this year.
Brent oil for July settlement, which expires today, gained 26 cents to $97.39 a barrel on the London-based ICE Futures Europe exchange. The more-actively traded August future rose 11 cents to $96.83. The European benchmark contract’s premium to West Texas Intermediate was at $14.63, from $14.51 yesterday.
Ministers from Ecuador, Kuwait and Nigeria said yesterday that OPEC is set to keep its 30 million barrel-a-day limit. Venezuela, Iran, Iraq, Angola, Ecuador and Libya have argued that crude supplies are excessive.
While an increase of as much as 1 million barrels a day suggested by some Gulf Arab countries would help Europe weather its slowdown, the 12-member group will probably settle on the status quo, according to two Middle Eastern delegates who declined to be identified because a decision hasn’t been made.
The International Energy Agency reduced its forecast for 2012 crude consumption to 89.9 million barrels a day, the Paris- based energy adviser said yesterday. That’s revised down by 100,000 barrels from May and reflects an increase of 820,000 barrels from last year.
U.S. retail sales fell 0.2 percent in May, matching the revised decrease for April, Commerce Department figures showed yesterday in Washington. Spain was cut three steps to Baa3 from A3 by Moody’s, which cited the nation’s increased debt burden, weakening economy and limited access to capital markets.
U.S. crude-oil supplies dropped 191,000 barrels last week, a report from the Energy Department showed yesterday. They were forecast to slip 1.5 million barrels, according to the median estimate from 12 analysts in a Bloomberg News survey.
Gasoline stockpiles declined 1.7 million barrels, the report showed. They were projected to rise 1.4 million barrels, according to the survey. Distillate inventories, a category that includes heating oil and diesel, slid 63,000 barrels compared with a forecast 1.2 million barrel gain.
Companies operated refineries at 92 percent of capacity last week, up 1 percentage point from the prior week and the highest level since August 2007, the report showed.
Demand for fuels averaged 18.7 million barrels a day over the past four weeks, the Department reported. That’s down 1.9 percent from a year ago. The drop is “reflecting the ongoing weakness in macro data,” according to a report yesterday from Michael Wittner, global head of oil market research at Societe Generale SA in New York.
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