Oil fell in New York and headed for a third weekly decline on speculation the biggest gain in two months yesterday was exaggerated amid rising supplies.
Futures slid as much as 0.4 percent after surging 4.1 percent yesterday on concern tension between Turkey and Syria will disrupt Middle East output. Saudi Arabia, OPEC’s biggest crude producer, sees no difficulty in meeting demand, according to Oil Minister Ali al-Naimi. Iraq’s exports from its Kurdish northern region will increase to 200,000 barrels a day from 170,000 “within days,” Oil Minister Abdul Kareem al-Luaibi said. Prices may drop next week as U.S. production rises, a Bloomberg survey showed.
“The situation with the oil market is that current and forecast future demand levels over the next 12 months are well covered by supply and that’s been the driving factor behind the decline we’re seeing in recent weeks,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The most likely scenario is that this will continue to be the case.”
Crude for November delivery fell as much as 36 cents to $91.35 a barrel and was at $91.43 in electronic trading on the New York Mercantile Exchange at 10:04 a.m. in Tokyo. The contract rose $3.57 to $91.71 yesterday. Prices are down 0.8 percent this week, for the longest run of weekly declines since June, and 7.5 percent this year.
Brent oil for November settlement was down 45 cents, or 0.4 percent, at $112.13 after advancing $4.41 yesterday on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $20.70 to New York-traded West Texas Intermediate grade.
Prices surged yesterday as Turkey’s parliament authorized the government to order military action in Syria after a mortar bomb fired across the border on Oct. 3 killed five Turks. The decision highlights the risk that neighboring countries may be drawn into Syria’s civil war. Countries in the Middle East and North Africa were responsible for 36 percent of global oil production and held 52 percent of proved reserves in 2011, according to BP Plc’s Statistical Review of World Energy.
Twenty-one of 38 analysts in the Bloomberg survey, or 55 percent, forecast oil prices in New York will drop through Oct. 12. Thirteen respondents, or 34 percent, predicted they will gain and four said there will be little change. U.S. crude output rose to 6.52 million a day last week, the most since December 1996, an Energy Department report on Oct. 3 showed.
Oil prices have been “very high” this year even with an economic slowdown in many countries and the Organization of Petroleum Exporting Countries is helping to keep them under control, al-Naimi said yesterday at a conference in Ankara, Turkey. Brent will stay between $100 and $120, which is “acceptable for all,” Iraq’s al-Luaibi said at a meeting of the oil ministry in Baghdad yesterday.
Crude is on course for its strongest second half of the year on record, according to the median of 26 analyst estimates tracked by Bloomberg. WTI will cost $94.50 a barrel in New York this quarter, up from $92.20 in the previous three months, the predictions show. The previous highest level for any second half was $91.78 a barrel in 2011.