- Russia is ready to participate in coalition against IS: Putin
- Moscow limits retaliation to economic steps after jet downed
Oil fell in New York for the first time this week as fears of Russian military retaliation against Turkey dissipated.
Russian President Vladimir Putin said his country is ready to participate in a broad coalition against the Islamic State after meeting with French President Francois Hollande in Moscow. While announcing tighter controls on Turkish imports in response to the shooting down of a Russian fighter jet near the Syrian border on Tuesday, Russia ruled out military action. The standoff between the two countries had raised tension in the Middle East, a region holding almost half the world’s oil reserves.
Tension has “dissipated,” Michael Hewoil, senior analyst at London-based CMC Markets Plc, said by phone. “Initially, there was a bit of concern that it would increase the geopolitical risk in that region.”
West Texas Intermediate for January delivery fell 53 cents, or 1.2 percent, to $42.51 a barrel at the 1 p.m. close of trading on the New York Mercantile Exchange. The volume of all futures traded was 74 percent below the 100-day average. Floor trading was closed today because of the U.S. Thanksgiving holiday.
Brent for January settlement slid 71 cents, or 1.5 percent, to $45.46 a barrel on the London-based ICE Futures Europe exchange, the first decline in seven days. The European benchmark crude traded at a premium of $2.95 to WTI.
U.S. stockpiles of oil rose 961,000 barrels last week to 488.2 million barrels, within 3 million barrels of the record set in April, according to the Energy Information Administration data released yesterday.
“We saw some builds in inventories yesterday that have weighed on prices,” Michael Poulsen, an analyst at Global Risk Management Ltd., said by phone. Oil “is simply not moving fast enough out of inventories because demand has not caught up.”
Oil has slumped more than 40 percent over the past year amid speculation a global surplus will be prolonged as U.S. inventories remain more than 100 million barrels above the five-year seasonal average and OPEC pumps above its quota.
Inventories have climbed even after U.S. oil drillers have idled about 65 percent of the country’s rigs since October 2014. The number of rigs targeting oil in the U.S. fell by nine to 555 in the week through Nov. 25, the lowest level since June 2010, Baker Hughes Inc. said on its website.
The Organization of Petroleum Exporting Countries meets Dec. 4 in Vienna to discuss production quotas. Member Iran plans to increase output next year and will pitch more than 50 oil and gas projects to foreign investors at a two-day conference in Tehran starting Nov. 28.