BLBG: Oil Little Changed as Economic Slowdown Curbs Fuel Consumption
By Grant Smith
Nov. 14 (Bloomberg) -- Crude oil traded little changed, heading for a second weekly decline, as the global economic slowdown cut demand in the largest energy-consuming countries.
China Petroleum & Chemical Corp., supplier of more than half the fuel in the world's second-biggest oil consumer, is slashing processing rates by 10 percent from July's record, company officials said today. Europe's economy fell into its first recession in 15 years in the third quarter, while a U.S. Energy Department report yesterday showed fuel demand in the last four weeks down 6.6 percent from a year ago.
``The outlook unfolding in developed economies is increasingly bleak,'' said Harry Tchilinguirian, senior oil analyst with BNP Paribas SA in London. ``It's up to the emerging markets to anchor the demand outlook for the rest of this year and next.''
Crude oil for December delivery traded at $58.19 a barrel, 5 cents lower, on the New York Mercantile Exchange at 1:33 p.m. London time. The contract earlier rose as much as $59.96 before declining as low as $57.11.
Prices have tumbled 61 percent from a record $147.27 on July 11. Oil is set to fall 5.5 percent this week.
The Organization of Petroleum Exporting Countries, supplier of 40 percent of the world's crude, is ``very likely'' to recommend a production cut at the end of this month, Iran's OPEC governor Mohammad Ali Khatibi told the Mehr news agency.
OPEC Meeting
OPEC will hold a consultative meeting on Nov. 29 in Cairo, according to a spokesman at the group's Vienna headquarters. It will coincide with a gathering of Arab oil ministers already scheduled for that day.
The organization decided at a meeting in Vienna last month to cut the production target for 11 of the group's members by 1.5 million barrels a day, from 28.8 million barrels a day.
``The production cut means that spare capacity will be increased,'' said Tetsu Emori, a fund manager with Astmax Ltd., Japan's biggest commodities asset manager, in Tokyo. ``So this should be a bearish factor longer-term even if it is bullish for the very short-term.''
China Petroleum, or Sinopec, will process about 15 million metric tons a month, or 3.65 million barrels a day, starting November, said three refinery officials, who declined to be named because of internal rules.
China's Spending
China's fixed-asset investment growth has slowed, the statistics bureau said today, signaling a slowdown in the world's fourth-biggest economy is deepening.
BNP Paribas SA slashed its oil price forecast for next year by 21 percent and said weakness in demand will have the ``upper hand'' in determining prices for the next few quarters. The bank expects West Texas Intermediate, the benchmark U.S. crude, to average $65 a barrel this quarter and $75 next year.
Oil traders made their biggest bet yet that OPEC will fail to prevent crude prices from plunging below $30 a barrel.
Trades in crude-oil options contracts that would allow the holder to sell oil for February delivery at $30 a barrel reached 1,407 on the New York Mercantile Exchange yesterday, making the contract the day's second-most active, exchange data show.
U.S. crude-oil stockpiles rose 22,000 barrels to 311.9 million barrels last week, the Energy Department said yesterday. Inventories were forecast to climb 1 million barrels, according to the median of 13 responses in a Bloomberg News survey.
Brent crude oil for January settlement fell as much as $1.41 cents, or 2.5 percent, to $54.83 a barrel on London's ICE Futures Europe exchange. It was at $55.93 a barrel at 1:07 p.m. London time.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net.
