Oil Trades Near Eight-Month Low Before OPEC Meeting

Oil traded near its lowest closing price in eight months in New York before the Organization of Petroleum Exporting Countries meets to discuss potential changes to its production ceiling.

Futures fluctuated, rising as much as 0.6 percent after earlier falling for the fifth time in six days. OPEC, which convenes 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 group’s ministers said. Oil advanced after approaching a technical support level, data compiled by Bloomberg showed.

“The market is in a distinctive wait-and-see mode,” Ole Hansen, senior manager of trading advisory at Saxo Bank A/S in Copenhagen, said by phone. After the results of the OPEC meeting the “immediate focus will switch to Greece elections this weekend because that’s really where demand side questions will be answered,” he said.

Oil for July delivery was at $82.76 a barrel, up 14 cents, in electronic trading on the New York Mercantile Exchange at 1:40 p.m. London time. It earlier fell 0.4 percent to $82.27. The contract slid 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, dropped 39 cents to $96.74 a barrel on the London-based ICE Futures Europe exchange. The more-actively traded August future fell 40 cents to $96.32. The European benchmark contract’s premium to New York-traded West Texas Intermediate narrowed to $13.98 from $14.51 yesterday.

OPEC Output

Oil in New York has technical support along its 200-week moving average, according to data compiled by Bloomberg. Futures last week halted their decline near the indicator, which is at $80.80 a barrel this week. Buy orders tend to be clustered near chart-support levels.

Greece will hold elections on June 17, after inconclusive parliamentary elections on May 6, that will decide whether the country stays in the euro. The European debt crisis deepened as the credit ratings of Spain and Cyprus were downgraded by Moody’s Investors Service.

The break-even price of Brent for oil-producing nations in the Gulf Cooperation Council will fall to about $80 a barrel this year, the first drop since 2003, Deutsche Bank AG said in a report today.

Brent may average $115 a barrel this year, Mirae Asset Management Co. said in a report today. The rebound is linked to Middle East geopolitical risk, it said.

Bad Economic Situation

Ministers from Ecuador, Kuwait and Nigeria said yesterday that OPEC is set to keep its 30 million barrel-a-day limit. 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.

Venezuela will ask OPEC members to cut output, Rafael Ramirez, the country’s energy minister, said today in Vienna. “There is overproduction, and the economic situation is bad in the euro zone,” he said in an interview. “The market has a lot of oil.”

Countries including Venezuela and Iran, OPEC’s second-biggest producer, have argued that crude supplies are excessive. Venezuela overtook Saudi Arabia last year as the nation with the largest proven oil reserves, BP Plc said in its Statistical Review of World Energy yesterday. The South American country’s deposits were at 296.5 billion barrels at the end of last year, surpassing Saudi Arabia’s 265.4 billion, BP said.

IEA Forecast

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 daily from last year.

U.S. demand for fuels averaged 18.7 million barrels a day over the past four weeks, the Energy Department reported yesterday. That’s down 1.9 percent from a year ago. The drop is “reflecting the ongoing weakness in macro data,” Michael Wittner, the global head of oil market research at Societe Generale SA in New York, said in a report.

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.

Crude supplies dropped 191,000 barrels last week, the Energy Department report showed. They were forecast to slip 1.5 million barrels, according to the median estimate from 12 analysts in a Bloomberg News survey.

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.

Brent’s July premium over August was at 42 cents, compared with 41 cents yesterday. The widening price spread is attributed to concern of the upcoming Greek election as well as the OPEC meeting, according to Ehsan Ul-Haq, senior market consultant at KBC Energy Economics in Walton-on-Thames, England.