Brent crude halted a two-day advance in London before European finance ministers meet to discuss aid for Greece amid concern that the region’s debt turmoil will constrain fuel consumption.
Futures dropped as much as 0.8 percent as ministers prepared to assess whether the latest round of cuts agreed by Greece are sufficient to warrant further assistance. Saudi Arabian Oil Minister Ali al-Naimi said that prices, down 15 percent in London from this year’s peak, are “good.” U.S. oil output is poised to surpass Saudi Arabia’s in the next decade, the International Energy Agency said. Hedge funds reduced bullish bets on Brent and West Texas Intermediate in the week to Nov. 6.
“We are no closer to a comprehensive solution for Europe,” said Guy Wolf, a strategist at London-based commodities broker Marex Spectron Group Ltd., who predicts oil prices will recover in the first quarter. “While Europe remains a source of concern for the market, the global growth outlook has improved.”
Brent for December settlement on the London-based ICE Futures Europe exchange was at $108.93 a barrel, down 47 cents, as of 1:23 p.m. local time. The European benchmark crude was at a premium of $23.42 to New York-traded contracts.
Crude for December delivery dropped 58 cents to $85.49 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 98 cents to $86.07 on Nov. 9, the highest close since Nov. 6. Prices are down 13 percent this year.
The oil market is “comfortable” and “balanced,” al-Naimi told reporters in Abu Dhabi yesterday. Consumers are also happy with prices, he said, adding that the kingdom produced 9.7 million barrels a day in October.
Europe’s finance chiefs gathering at 5 p.m. in Brussels intend to prevent a 5 billion-euro ($6.4 billion) Greek bill redemption on Nov. 16 from triggering an accidental default, while they’re unlikely to ratify a 31.5 billion-euro payment to Greece that has been frozen since June, a European official said Nov. 9.
Growing supplies of crude extracted through new technology including hydraulic fracturing of underground rock formations will transform the U.S. into the largest producer for about five years starting about 2020, the IEA said today in its annual World Energy Outlook.
“The self-sufficiency story for the U.S. is not only given by the growth in oil production, but also the steps taken to reduce oil consumption in the transport sector,” Fatih Birol, the IEA’s chief economist, said today at a press conference in London.
Crude in New York remains in a downtrend channel on the daily chart, signaling last week’s rebound may not be sustained, according to data compiled by Bloomberg. Futures have traded between the middle and lower Bollinger Bands for more than seven weeks. These indicators, representing technical resistance and support levels, are about $88.50 and $83 a barrel today.
Hedge funds and other speculators cut bullish bets on West Texas Intermediate crude as demand declined after Hurricane Sandy, production increased to the highest since 1994 and U.S. President Barack Obama won re-election.
Money managers reduced net-long positions, or wagers on rising prices, to 122,309 futures and options combined in the seven days ended Nov. 6, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Nov. 9. That’s the lowest since the week to Sept. 28, 2010.
In London, funds and other money managers reduced bullish bets on Brent to the lowest level in more than three months, according to data from ICE Futures Europe.
Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 87,711 lots in the week ended Nov. 6, the exchange said today in its weekly Commitment of Traders report. That marks the lowest since July 31.