BLBG: Crude Oil Trades Little Changed as OPEC Considers Output Cut
By Alexander Kwiatkowski
Nov. 28 (Bloomberg) -- Crude oil traded little changed in London as OPEC gathered to consider cutting production in an attempt to halt the slide in prices.
The Organization of Petroleum Exporting Countries meets in Cairo this weekend to consider further output cuts. Prices are being driven by the global economic crisis, Qatar’s Oil Minister said on arrival in Egypt. Oil has slumped 63 percent from a record $147.27 a barrel in New York on July 11 as demand falls around the world and economic reports show a deepening recession in the U.S., the world’s largest oil user.
“OPEC is aware that the market is not so concerned about the production side as it is about demand,” said Eugen Weinberg, a Commerzbank AG analyst in Frankfurt. “There is lots and lots of pressure on the market and that is weighing on the price.”
Brent crude oil for January settlement traded up 7 cents at $53.20 on London’s ICE Futures Europe exchange at 1:14 p.m. local time. It earlier fell as much as 98 cents to $52.15 a barrel.
On the New York Mercantile Exchange, crude oil for January delivery dropped 89 cents, or 1.6 percent, to $53.55 a barrel at 1:01 p.m. London time. Nymex was open only for electronic trading yesterday because of the U.S. Thanksgiving holiday. Futures closed at $54.44 on Nov. 26 after rising 7.2 percent.
Concerns about oil consumption have increased after reports showed the U.S. economy slowed and consumer spending fell. Gasoline demand dropped 1.3 percent from last week, the Energy Department said in its weekly report on Nov. 26.
Consumer Slump
Ministers from OPEC, which supplies 40 percent of the world’s oil, are meeting tomorrow for the third time in as many months to discuss a further cut in production.
OPEC decided last month to reduce supply quotas by 1.5 million barrels a day. The Cairo meeting, originally intended just for ministers from Arab nations, was expanded into a full OPEC meeting to include Venezuela, Iran and Angola.
“The market is very related to the global economic crisis,” Qatar’s Oil Minister Abdullah bin Hamad al-Attiyah said at Cairo airport today. “There’s pressure on demand.” Al- Attiyah couldn’t say whether the group will cut production at the Cairo meeting.
“Now we are preparing the data and we will take the final decision in Algeria,” Iranian Oil Minister Gholamhossein Nozari said as he arrived at his hotel in Cairo. The group meets in Oran, Algeria, on Dec. 17.
Saudi Oil Minister Ali al-Naimi declined to speak as he arrived in Cairo today.
“As long as people are worried about the overall economy, prices will continue to fall,” said Ehsan Ul-Haq, head of research at JBC Energy GmbH in Vienna. “By the end of the year we think they will cut another 1.5 million to 2 million barrels a day. It could happen in Cairo or Algeria, it doesn’t matter.”
Fourteen of 38 analysts surveyed by Bloomberg News, or 36 percent, said oil prices will decline through Dec. 5. Twelve respondents, or 32 percent, said oil will rise and 12 forecast oil will be little changed.
To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net
